US Consumer Confidence Preview: at record highs, but market's attention somewhere else

The US will present the preliminary Michigan Consumer Sentiment Index for October this Friday at 12:30 GMT, foreseen at 100.4 vs. September final reading of 100.1. The monthly survey has offered a three-digit outcome only three times in the last 14 years, and September reading was the second best high after hitting in March 101.4. According to the University, the index was supported by expectations for improved personal finances, while inflation expectations remained subdued. Consumers' concerns remain focused on the trade war and the effects it may have on the local economy.

 Another gauge of consumer confidence, the CB private research group one, also hit a multi-year high in September, indicating that job growth and a strong economic outlook bolstered Americans’ expectations for the future. The index rose to 138.4 in September from 134.7 in August.

Consumer confidence will most likely remain high, as the causes of September record readings remain the same, and despite the Michigan reading is seen retreating, the index will likely remain at above healthy levels, although a slide below the 100 level could be a psychological drag for speculative interest, moreover in the current dollar-negative environment. If something, consumption could cool in the medium-term, should trade tensions take a turn to the worse.

The short-term effects of the release could be directly linked to what equities and yields are doing ahead of the release, as both have stolen all of the market's attention.  Nevertheless and considering the ongoing dollar's weakness, it could be that a worse-than-expected outcome exacerbates dollar selling while an above-expected one would do little for the greenback.