US DATA: NY Fed: Consumers Less Pessimistic On Jobs, Finances (2/2)
Jun-09 15:54
The vast majority of Labor Market and Household Finance categories in the NY Fed's Survey of Consumer Expectations (SCE) improved in May, though many remain weaker compared with late 2024/early 2025 as tariff uncertainty appears to continue in respondents' minds.
- One-year ahead earnings growth expectations rose 0.2pp to 2.7%, not far from the 12-month average of 2.8%, while mean unemployment expectations (re the mean probability the US national unemployment rate will be higher in 1 year's time) fell 3.3pp to 40.8%, though that's still above the 37.7% 12-month average. It should be noted that this hasn't been a particularly effective series in predicting future unemployment rates, but is still useful as a gauge of current consumer sentiment.
- Respondents' mean probability of losing their job in the next 12 months also improved, falling 0.5pp to 14.8%, with the expected 12-month quits rate up 0.1pp to 18.3% - and the perceived probability of finding another job in 3 months (if respondents left the current job) rose 1.5pp to 50.7% (12m avg 52.2%).
- Against this backdrop, respondents were more optimistic (or at least, less pessimistic) on household finance prospects (current situations compared to a year ago and expectations about year ahead), with median expected household income growth up 0.1pp to 2.7% (albeit below the 12m avg 3.0%), perceived credit access improving, and lower perceived probability of missing a minimum debt payment.
- Expectations of higher equity prices no doubt helped here too after the May stock recovery: the mean perceived probability that stocks would be higher in 12 months rose to 36.3%, though that's below the 12-month average 38.7%.
- Perhaps the weakest aspect of the May report overall was that median nominal household spending growth expectations dipped 0.2pp to 5.0%, though that's above the trailing 12-month average of 4.9% and being a nominal figure it may simply reflect lower 1Y inflation expectations.
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MACRO OUTLOOK: US PPI/Retail Sales And Powell Follow On Thursday [2/2]
May-09 20:17
- Core PCE implications will then be watched closely in Thursday’s PPI report, and we expect with additional focus on portfolio management after last month’s huge upward revision to February.
- Retail sales, whilst only reported in nominal terms, will offer a keenly awaited look at consumer behavior.
- Real spending moderated to 1.8% annualized in Q1 after 4.0% in Q4 despite likely tariff front-running, with April a good test of how much discretionary spending was pulled forward.
- Finally, Powell provides “Opening Remarks” at the Second Thomas Laubach Research Conference, although he’s allotted twenty minutes so there is scope for more substantive remarks than you’d usually expect. His message at Wednesday’s FOMC press conference was one firmly of being in no hurry to cut rates amidst huge uncertainty. He also appeared to put more weight on hard data over soft indicators that appear more stagflationary in nature.
MACRO OUTLOOK: US CPI Offers Look At April Tariff Distortions on Tuesday [1/2]
May-09 20:15
- The week’s US data calendar is highlighted by CPI inflation on Tuesday although PPI inflation and retail sales reports on Thursday are in close second. All three releases are going to be important, offering further hard data for April in the first month under reciprocal tariffs. What’s more, PPI and retail sales are followed by Fed Chair Powell just ten minutes after their release (more on that below).
- Core CPI inflation is seen accelerating to 0.3% M/M in April, with six unrounded estimates we’ve seen to date averaging 0.27% M/M.
- A potential for a ‘low’ 0.3% aside, it’s still likely a swift acceleration from a particularly soft 0.06% M/M in March which was in large part down to surprisingly abrupt declines in lodging away from home (-3.5%) and airfare (-5.3%) prices.
- This lodging weakness carried over to core PCE inflation back in March, at just 0.03% M/M after a particularly strong 0.50% M/M in February in a large wedge with core CPI at 0.23% M/M.
- Markets currently price a next Fed cut with the September FOMC meeting.
USDCAD TECHS: Pressuring Resistance
May-09 20:00
- RES 4: 1.4296 High Apr 7
- RES 3: 1.4111 High Apr 4
- RES 2: 1.4041 50-day EMA
- RES 1: 1.3943 High May 9
- PRICE: 1.3930 @ 16:06 BST May 9
- SUP 1: 1.3751 Low May 6
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
USDCAD has recovered from its recent lows. Despite the recovery, the trend condition remains bearish and short-term gains are considered corrective. A fresh cycle low on Tuesday reinforces the bearish theme. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Note that moving average studies are in a bear mode position, highlighting a dominant downtrend. Key resistance is seen at 1.4041, the 50-day EMA.
