USD & Treasury Yields Drop as US Consumer Confidence Slides

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Consumer Confidence Report – Talking Points

  • Consumer Confidence slipped to 125.1 in September, which follows last month’s decline to 134
  • The US Dollar dropped along with equity markets as investor angst builds over fears that the consumer driven US economy may face increased headwinds as trade issues continue to drag sentiment
  • Tariffs, trade policy and slowing global GDP growth continue to worry consumers as the US-China trade war continues into it’s third year

Markets are taking a step back after an upbeat start to the morning in response to the release of this morning’s Conference Board’s Consumer Confidence Index, which showed a decline for September to 125.1, down from the previous month’s reading of 134. The US Dollar fell on the report as investors fear that the consumer-driven US economy could be running out of steam. The USD retraced a large part of the move down over the preceding hour, but the report will likely continue to impact investor sentiment when coupled with other data that paint a pessimistic picture of the US economy.

DXY Price Chart – 1 Minute Time Frame

Trade issues between the US and China have become an ingrained theme in global markets as both sides fail to make any substantive or lasting progress. Chair Powell noted trade policy as a source of uncertainty going forward along with slower growth abroad at this months FOMC press conference. The Conference Board’s expectations index, which measures consumers short term outlook on income, business, and labor market conditions fell to 95.8 from 106.4 in the previous month seeing that 14.3% of respondents felt businesses will be worse off six months from now – an increase from 10.2% in August.

US Consumer Confidence Chart

The report also spurred a resumption in declining treasury yields, which continues the overall trend of falling sovereign interest rates witnessed so far this year, though September has seen a big rebound higher off 2019 lows. Gold prices, another asset reflecting safe-haven demand and risks appetite, also moved higher following the downbeat consumer confidence report, with spot gold rising to 1523 from 1517.

–Written by Thomas Westwater, Intern Analyst for DailyFX.com

Contact and follow Thomas on Twitter @FxWestwater

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