US 10-year Treasury Note
US consumer confidence rose to a third consecutive 18-year high of 137.9 from 135.3 (was 138.4) in September and 134.7 in August, versus “just” 127.9 in July and a previous 17-year high of 130.0 in February. The current conditions, expectations, and jobs strength diffusion indexes also all rose to 18-year highs in October, with all four October gains from the consumer confidence survey reflecting downward revisions in September. All the major confidence surveys are oscillating around remarkably high levels. For other October surveys, the Michigan sentiment index fell to 98.6 from 100.1 in September, versus a 7-month low of 96.2 in August, to leave fluctuations just below the 14-year high of 101.4 in March. The IBD/TIPP index popped to 57.8 from 55.7 in September, versus a similar 58.0 cycle-high in August. The Bloomberg Consumer Comfort index posted a 4-week climb to a 61.6 cycle-high in the final week of September to leave a 60.3 monthly cycle-high average, before slipping to leave a 60.1 average thus far in October. Confidence, producer sentiment and small business optimism have climbed since October of 2016 thanks to a factory rebound, faster U.S. and global GDP growth with strength in trade despite a market focus on tariffs, fiscal stimulus, and limited inflation risk.
Reflecting the reversed course again in stocks, which snapped higher after rolling over into the red ahead of the open, and by the news of another gain in consumer confidence, the 10-year bond future spiked 2.6 bps higher to retest 3.11% and the 118.85 level, just 1 bps below 50-period SMA in the hourly chart. The bond yield is keeping for the 3rd consecutive day a floor at 118.64 level. In general, bonds weakened globally amid a mixed performance in equities.
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Andria Pichidi
Market Analyst
HotForex
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