CB Consumer Confidence Exceeds Expectations But Traders Stay Cautious

Key Insights

• CB Consumer Confidence decreased from 103.7 in April to 102.3 in May.
• The report exceeded analyst expectations and showed that consumers remained in a decent shape despite debt ceiling drama.
• SP500 and U.S. Dollar Index are mostly flat today as traders react to the debt ceiling deal.

On May 30, Conference Board released its Consumer Confidence report, which indicated that CB Consumer Confidence declined from 103.7  in April to 102.3 in May. Analysts expected that CB Consumer Confidence would decrease to 99.

The Conference Board Commented: “Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy.”

However, the better-than-expected report indicates that consumer mood remained mostly stable despite the debt ceiling drama. In an ordinary day, such data could have pushed Treasury yields higher as healthy consumer activity provides Fed with an opportunity to raise rates in order to fight inflation.

However, the situation is different today as traders got back to their desks after the long weekend and react to the debt ceiling deal. Treasury yields are falling as traders use the recent rally in yields as an opportunity to buy U.S. government bonds at attractive prices.

The FedWatch Tool indicates that there is a 64.3% probability of a 25 bps rate hike at the next Fed meeting in June.

Interestingly, U.S. Dollar Index is mostly flat today, and it looks that traders are waiting for additional catalysts.

SP500  settled near the 4215 level as traders reacted to the debt ceiling deal. CB Consumer Confidence report did not have a material impact on SP500 dynamics.

Gold  moved away from session lows and climbed above the $1950 level as traders reacted to the pullback in Treasury yields.

For a look at all of today’s economic events, check out our economic calendar.