14 Nov COTW: Higher Inflation Expectations
- The University of Michigan’s consumer survey is a critical tool for gauging U.S. inflation expectations, a key indicator of economic sentiment and future inflation trends. Preliminary November estimates show U.S. consumer sentiment falling for a fourth consecutive month, as higher interest rates and elevated prices weighed on consumers’ future outlook.
- Further, inflation expectations (both for the shorter-term and the medium-term) unexpectedly jumped up this month. One-year inflation expectations rose to 4.4% (compared to the expected 4.0%). Most importantly, the 5- to 10-year inflation outlook jumped to the highest levels in more than a decade, reaching 3.2% (compared to the expected 3.0%).
- Higher inflation expectations are not what the Federal Reserve will want to see and means that the Fed will likely double down on efforts to guide markets away from near-term interest rate cuts until inflation concerns ease.
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