As we were expecting Consumer Confidence fell again during the month of January. With the partial government shutdown and the political acrimony this could hardly have been unexpected.
The reading of 120 in January follows a 126.6 in December and down from a 18 year high of 137.9 in October.
The economic key here is whether we see a rebound in the next couple of months–or does confidence continue to erode? With the consumer driving almost 70% of the economy confidence is key.
Additionally today housing prices in the Case-Shiller 20 city index came in with an increase in prices of 4.7% year over year which is the slowest rate of increase since 2015 and dovetails with the 3 year low in existing house prices we saw last week.
With the softness in these reading (and we think confidence and housing are joined at the hips) we see the 10 year treasury now trading at 2.72%–off a couple basis points. If we see a dovish tone to the FOMC meeting ending tomorrow I expect to see rates in the 2.6’s%.