Michigan Consumer Sentiment Drops To 67.8; SP500 Pulls Back From Session Highs

On February 7, 2025, the Universtiy of Michigan released Michigan Consumer Sentiment report for February. The report indicated that Index of Consumer Sentiment decreased from 71.1 in January to 67.8 in February, compared to analyst forecast of 71.1.

Current Economic Conditions decreased from 74.0 in January to 68.7 in February, while Index of Consumer Expectations declined from 69.3 to 67.3.

Year-ahead inflation expectations soared from 3.3% to 4.3%. The University of Michigan noted that it was only the fifth time in 14 years that it had seen such a large one-month increase in inflation expectations. Long-run inflation expectations grew from 3.2% to 3.3%.

The University of Michigan commented: “Many consumers appear worried that high inflation will return within the next year.”

U.S. Dollar Index moved higher as traders reacted to the Consumer Sentiment report. Rising inflation expectations may provide support to the American currency. Currently, U.S. Dollar Index is trying to settle above the 107.75 level.

Gold climbed above the $2880 level after the release of the report. Traders keep buying gold as a hedge against inflation.

SP500 pulled back from session highs and moved below the 6060 level. Traders are worried that rising inflation expectations will force the Fed to be more hawkish than previously expected.

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