12.09.25 - Consumer sentiment further deteriorates

Consumer sentiment further deteriorated in September, reaching its lowest level since May. The University of Michigan’s preliminary reading of its Survey of Consumers fell to 55.4, well below the 58.1 expected by economists and down from 58.2 in August.

While inflation expectations remained stable, they are still elevated: year-ahead inflation was seen at 4.8%, unchanged from August but above July’s five-month low of 4.5%.

Markets: investors ignore negative data

• US equities mostly up led by tech

• US 10-year yield quickly touched 4.08%

• Gold: continues its uptrend trading around USD 3’650/oz

• US dollar: regains some ground

• Cryptos: follow the risk on stance

My View: This combination of weakening sentiment and sticky inflation highlights the challenging backdrop for households, as purchasing power remains pressured and confidence subdued.

Despite the negative signal, equity indices remain supported by speculation of policy easing, with traders betting that the Federal Reserve will prioritize growth risks over inflation persistence.

Markets are ignoring negative data points and trading as if the consumer slowdown does not matter. This is a sign of speculation, where short-term positioning outweighs fundamentals. History has shown that such disconnects often increase fragility — when sentiment finally shifts, corrections can be sharp.

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