Each month Bespoke runs a comprehensive survey on the US consumer, giving us proprietary insights in nearly real-time to the major driver of the US economy. We ask dozens and dozens of questions related to every area of the economy, and we also ask about feelings towards financial markets. One of the questions we ask survey participants is where they think interest rates will be one year from now. Below is a chart showing the monthly reading for this question over the last five years.
When the line is falling, it means consumers expect interest rates to be lower, while a rising line means consumers think interest rates will be higher. As shown, expectations have fallen off a cliff this year as actual interest rates have collapsed, meaning consumers basically just look at what’s been happening and extrapolate it into the future. This is a bad sign for bonds, which fall when interest rates rise and vice versa, in our view. Whenever the masses get so one-sided, it’s usually a sign that a trend reversal is near. Start a two-week free trial to Bespoke Institutional for full access to our research and market analysis. To receive our survey analysis every month, you’ll need to purchase our Consumer Pulse add-on.