US: Focus shifts on consumer sentiment and Chicago PMI data - Nomura

According to analysts at Nomura, the preliminary March issue of the University of Michigan consumer survey suggests US consumer sentiment remained strong in early March despite widespread news coverage of President Trump’s proposed tariffs and the subsequent market reaction.

Key Quotes

“The consumer sentiment index rose to 102.0 in February, the highest level since 2004, from 99.7 in January. Although there appears to be a gap between elevated consumer confidence and lukewarm personal spending in Q1, we remain optimistic on consumer spending in 2018.”

“The median of one-year inflation expectations jumped to 2.9%, from 2.7%, in the preliminary report. Although a 0.2pp jump is notable, we caution against reading too much into a single observation. It will take more data to detect a change, if any, to an underlying trend, in our view. Medium- to long-term inflation expectations remained stable. Five- to 10-year inflation expectations remained at 2.5%.”

“Chicago PMI: Relevant components of the Empire State and Philly Fed business surveys rose solidly in March. We expect the Chicago PMI to increase a solid 2.6 index points to 64.5 in March. The Empire State and Philly Fed surveys indicate that new orders and shipments rose sharply in March and employment activity remained healthy. These readings appear consistent with continued expansion in industrial activity.”