Michigan confidence, not giving markets much confidence - ING

James Knightley, analyst at ING Bank explained that US University of Michigan confidence fell in March to 90.0 from 91.7 in February versus expectations of a rise to 92.2. 



"Both the current conditions and the expectations components dropped, which is a bit disappointing given the rebound in equities and the strength in the labour market. It could partially be down to the rise in gasoline prices from around $1.70/gallon as the mid-point for the national average for February versus $1.97/gallon as it stood yesterday (AAA data).

It’s possible that politics may also be weighing on sentiment given the preponderance of negative sound-bites. Nonetheless, we expect consumer spending to hold up given positive real wage growth and rising employment. Interestingly 1Y & 5-10Y inflation expectations rose to 2.7%, which is supportive of the Fed rate hike story."

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