Vital Statistics:
Stock futures are higher this morning after Trump relaxed some tariffs on smartphones over the weekend. Bonds and MBS are up.
We will have a shortened week with the markets closed on Friday. We will get some housing data with housing starts and the NAHB Housing Market index. We will also get industrial production and retail sales.
Consumer sentiment fell again, according to the University of Michigan Consumer Sentiment Survey. Tariffs (or at least the fear of them) are the main driver. The survey period covered the entire tariff tantrum, but ended before the partial delay.
Sentiment has fallen about 30% since December 2024. Most of the fall in sentiment is being driven by expectations for the future, not current financial conditions. In other words, consumers may have a job, but feel less secure about that job going forward. The number of people expecting unemployment to rise hit the highest level since 2009.
Inflationary expectations increased markedly again, with the year-ahead inflation expectation rising to 6.7%, which is the highest reading since 1981. This is strange given that March CPI inflation was actually negative, but I think the move in the stock market, along with the media reaction was a big driver.
The Atlanta Fed GDPNow model sees Q1 GDP growth at -2.4%.
