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U.S. consumer sentiment plummets in early August to decade low

The University of Michigan said its preliminary consumer sentiment index fell to 70.2 in the first half of this month from a final reading of 81.2 in July. That was the lowest level since 2011, and there have been only two larger declines in the index over the past 50 years. Those were at the depths of the 2007-2009 recession and during the first wave of shutdowns in April 2020 at the beginning of the pandemic.

U.S. consumer sentiment dropped sharply in early August to its lowest level in a decade, in a worrying sign for the economy as Americans gave faltering outlooks on everything from personal finances to inflation and employment, a survey showed on Friday.

The unexpected reading could give Federal Reserve policymakers pause if it translates in the months ahead to a dent in economic activity. The central bank has been getting closer to a decision on when to begin pulling back the extraordinary stimulus it put in place to shield the economy from the COVID-19 pandemic.

U.S. 10-year Treasury yield falls below 1.3% as consumer confidence drops to 2011 levels

The 10-year Treasury yield dropped further Friday, briefly dipping below 1.3%, after U.S. consumer sentiment plummeted to its lowest level since December 2011, according to data from the University of Michigan.

The yield on the benchmark 10-year Treasury note fell 8 basis points to 1.287% at 4:10 p.m. ET. The yield on the 30-year Treasury bond gave up 9 basis points, falling to 1.937%. Yields move inversely to prices and one basis point is 0.01%.

Dollar dented as consumer sentiment dives

The U.S. dollar fell to a one-week low against a basket of currencies on Friday, after a survey showed U.S. consumer sentiment dropped sharply in early August to its lowest level in a decade.

The dollar index, which measures the greenback against a basket of six rivals, was 0.4% lower at 92.598, its lowest since Aug 6.

Traders continue to look toward the Fed’s central banking conference in Jackson Hole, Wyoming, later this month, for clues to the Fed’s next move.

Investors this week have been treated to a mixed bag of data. While U.S. producer prices data out Thursday showed surging prices, bolstering the case for the Federal Reserve removing some of its stimulus, it followed U.S. consumer price data on Wednesday, which indicated inflation may be peaking, potentially giving the Fed room to remain accommodative for longer.

Reference: CNBC, Reuters