News is what making the risk sentiment fragile today...
American consumer sentiment is at a two-year minimum
In January, American consumer sentiment shrank to its lowest value since US leader was elected more than two years ago because an everlasting shutdown of the federal cabinet and financial market volatility drove worries of a steep deceleration in economic surge.
The sink in confidence posted by the University of Michigan on Friday turns out to be the clearest indication that the impasse in Washington over US President’s demands for $5.7 billion to finance building a wall on America’s border with Mexico was affecting the US economy. US leader has associated high consumer confidence with a sign of his great job on the American economy.
While consumer sentiment is still high enough, the gathering dark clouds over the national economy could make American households become more cautious about spending, thus resulting in slower surge. As a matter of fact, consumer spending amounts to over two-thirds of the American economy.
Some market experts pointed out that the given report on consumer sentiment appears to be the first concrete evidence that the American economy is going to head south hard if the US government fails to have the shutdown resolved.
The longest government shutdown in the US history has eventually left up to 800,000 government employees without a paycheck. As for private contractors working for many government agencies, they lack wages too.
As the University of Michigan pointed out, its consumer sentiment index dived by 7.7% to an outcome of 90.7 in January, which appears to be the lowest value since October 2016 and also the steepest dive since September 2015. Market experts had foreseen an outcome of 97.0.
American financial markets generally neglected the dive in sentiment, with traders paying attention to another report on Friday disclosing that manufacturing output went up by the most for 10 months in December and on expectations for progress in the US-China trade clash.
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Welcome to Tuesday, people! Here’s your markets update ahead of the European trading session.