Consumer sentiment rises, September inflation data rose as expected

00:00 Julie

Now we have some breaking news as we cross the wire. Our PCE and personal consumption expenditures are in line with forecasts. This is from September, remember, so it’s up 3/10 of 1% on a monthly basis and 2.8% on a yearly basis. If you subtract variable food and energy costs, you still get a 2/10 percent increase, in line with estimates. And by the way, that’s in line with what the previous month’s increase looked like. Very good

00:26 Julie

From the PCE perspective, there is a stable outlook on the inflation front. We also have personal income and expenses. and I would like to remind you again that these are September figures due to the government shutdown. Personal income increases by 4/10 of 1%. This is a slightly better increase than expected. Personal spending increased by 3/10 of 1%. That’s all the September data we have from the government from the BLS. We also have a University of Michigan sensibility. and this is much newer

00:56 Julie

number. This is December’s preview. This came out a little better than expected; The headline count was 53.3, which was what economists had predicted on average at 52. Current conditions at UMich are slightly weaker than predicted at 50.7. My expectations are a little better. It’s very interesting here, we see inflation expectations moderate both one year and five to 10 years later. Put it all together, Michigan sentiment numbers

1:23 Julie

We look relatively positive here. We’re seeing the US major averages a little bit higher on this, but we’d like to get a little more detail on what we’re seeing in the markets today, both in reaction to that and more broadly. For that, we turn to our market editor Jared Blikre to find out more.

1:40 Jared Blikre

Thank you Julie. Ah yes, inflation seems to be benign at the moment. And honestly, when we get the CPI numbers for September, what was it a month ago? This morning we could find out what those numbers are. However, Michigan, the University of Michigan consumer sentiment numbers, as you said, any reaction we get to the price that’s new and looks like it’s bullish right now is most likely driven by that and the inflation component of that.

2:02 Jared Blikre

Consumers’ inflation expectations appear to be somewhat under control, or at least not out of control. And here we see that the Dow Industrials are up about 219 points for the day, which is about 45 basis points or half of 1%. Let’s also take a look at Nasdaq. Also on the highs, they appear to have surpassed the highest level reached since this morning’s open, and the S&P 500, much like the Dow, has gained about 4/10 of 1% there. I will check

2:29 Jared Blikre

The Russell 2000 is in the red today after hitting its first record since October. Let’s also check the micro broadcast because they reached a record level yesterday too. Originally they were green, now they are slightly red, but as I said, this is the time of year when volatility drops. Here is the VIX. You may see it briefly green there, but lower volatility is good. so you want to see it in red, which usually means higher stocks. And let’s check

2:52 Jared Blikre

Not much has been done in the bond market so far today. It’s only a fraction of a basis point higher, so not much of a change there. 10 years is 4.11 and then 30 years is 4.77%. That’s about a one basis point increase, not a huge amount. I also like to check out the US dollar by barely moving there. Lots of chops. So let’s check out the industry action. Just before the report, guess what? We look pretty similar right now. Communication Services was the leader with technology in second place.

3:15 Jared Blikre

And this is the current situation. Then you increase the materials by about 7/10 percent, it all performs depending on energy and consumer discretion. So here most of the cyclical sectors are in the green, although the industries seem to be sort of treading water. The only sector in red is utilities. This is a decrease of approximately 2/10 of 1%. Let’s take a look and see what Nasdaq is doing. After a good day for Nvidia yesterday, I think it was up around 1% or 2%. I’m a little red today but

3:40 Jared Blikre

He said that Communication Services is a pioneer. This is a sector where Alphabet is up 1%, Google is up 1%, and the commodity is up about two-thirds of 1%. And I want to show you a lot of the dark green here is what’s going on in semiconductors. Now let’s switch over and see that Nvidia is down a bit, but for the rest we’ve got Intel up almost 5%, Micron up over 4%, Western Digital, Lumentum up over 3%. There are some nice dark green areas there. And

4:06 Jared Blikre

It’s a pretty similar story in software, another strong day for Salesforce, although not quite as dark green. This is up 3 and a half percent, while Adobe is up 4 percent. I would also like to keep an eye on crypto because it can sometimes be sensitive to inflation and sometimes react to some of these reports. Here is Bitcoin’s daily decline of 1.79%. I don’t see much reaction here. It’s a bit of a red flag to leave you here, Julie, but it’s not exactly a big move from the reports.

4:32 Julie

Jared, thank you so much. Appreciate it.