Bankinter | Consumer Confidence has improved more than expected in August. It has risen to 103.3 versus the 101.0 expected and 101.9 previous (revised from 100.3 points). Both components improve: Expectations to 82.5 from 81.1 (revised from 78.2) and Current Situation to 134.4 from 133.1 (revised from 133.6).
Case-Shiller House Prices barely decelerated in June, highlighting the robustness of the real estate sector: +6.47% year-on-year in June versus +6.50% expected and +6.88% previously (revised from +6.81%). Month-on-month, up +0.42% month-on-month versus +0.30% expected vs +0.39% previously (revised from +0.34%). Richmond Fed Manufacturing Index (July): -19 versus -14 expected vs -17 previously.
Analysis team’s view: Slightly negative data for bonds and stocks. A strong labour market, with Consumer Confidence improving and House Prices rising well above the CPI (July +2.9% year-on-year) with strength, make for long lasting inflationary pressures. Ironically, the only positive for the stock markets in this data is the deterioration of the Manufacturing Index, something negative for the economy and which resurrects the proverb that sometimes what is bad for the economy is not so for the markets. Although everything points to an upcoming rate cut by the Fed, this environment is unfavourable to expect the Fed to cut rates again from September onwards.
