Maybe they’re still feeling the sting of January 2018 when they basically went ‘all-in’ on stocks (and bitcoin for that matter) and then saw prices crater for two months, but despite more new highs for equities, US consumers haven’t been really quick to embrace the market.  In Tuesday’s Consumer Confidence Report, for the question which asks consumers for their views on the direction of US equities, 41.6% expect prices to continue rising, while only 22.4% expect lower prices.  Granted, the 41.6% reading is a relatively big increase from June when the reading was at 33.5%, but it’s still below the 42.1% reading from May and the peak reading of 51.0% from January 2018. As shown in the green line of the chart, ever since the peak reading in January 2018, we have been seeing lower highs in the percentage of consumers expecting higher stock prices.

Consumers are also asked to give their views on interest rates in each month’s Consumer Confidence Report, and here we’ve seen some interesting moves over the last few months.  Ever since the Fed started to pivot towards lower rates at the start of the year, the percentage of consumers expecting higher interest rates has declined rapidly.  From a recent high of over 70% in late 2018, less than half of consumers now expect higher interest rates.  Meanwhile, the percentage of investors expecting lower rates has risen from near historic lows up to 15.7%.  For both of these series, July’s readings were the most extreme since late 2012.  Keep in mind too, that this comes as long-term treasury yields are close to historic lows.  Start a two-week free trial to Bespoke Institutional, and receive full access to all of our must-read content.

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