Consumer sentiment data from the University of Michigan

  • Prior was 93.4
  • Current conditions 111.0 vs 112.9 expected
  • Prior current conditions 113.4
  • Expectations 89.0 vs 81.5 expected
  • Prior expectations 80.5

Inflation:

  • 1-year expectations steady at 2.6%
  • 5-year expectation 2.5% vs 2.6%

Expectations were the driver. That's the biggest one-month jump in that component since the end of 2011.

USD/JPY barely budged on the headlines. The problem is that this report has been showing a pickup in sentiment for many months and there has been no corresponding pickup in growth or consumer spending. In short, the market is losing faith that the report is a good predictor.

Another reason the dollar might not be getting a bid is the tick lower in 5-year expectations. The Fed watches those numbers closely.