Michigan University data for the USA: inflation expectations sharply down, confidence up. What does this mean for the US economy and the crypto market?
The data is positive. It has pleased for once. But against the backdrop of the Middle East problem, prices are pulling down. Both in the stock market and in the crypto market.
Nevertheless, over the distance, today's Michigan data may turn out to be more important. We are observing the prospect of breaking negative public sentiments in the USA.
Americans' inflation expectations have fallen from 6.6% to 5.1%. Significantly stronger than the forecast. The five-year forecast also decreased to 4.1%, within the forecast.
Against the backdrop of declines in tariffs, such a signal is unequivocal: price pressure is easing faster than the 'street' feared.
At the same time, the consumer sentiment index jumped from a low of 52.2 to 60.5 - the first increase in six months and also significantly better than the forecast (53.5). Trust is still 20% below the December peak, but the trend is clearly reversing.
The consumer expectations index is also significantly above the forecast: 58.4 against a forecast of 49.0 and a previous value of 47.9.
What does all this mean?
- For the Fed - so far an argument to keep the rate unchanged and wait for confirmation of the trend from official inflation statistics. There are hints of positivity, but for the Fed, the Michigan study is certainly not the ultimate truth. They take it into account, but indirectly.
- For bond yields and for the US dollar - moderate downward pressure, which logically supports risky assets.
- For #BTC and top altcoins - a favorable environment. Real returns are softening, and the 'weakening dollar' has historically correlated with the rise of cryptocurrencies.
In total, we have calmed inflation expectations plus improved sentiments, which creates a window of opportunity for a continuation of the rally in risky assets. Simply because people with such sentiments are more inclined to look towards risky assets. But we are watching for the next releases of inflation statistics.