US: Focus on consumer sentiment and budget – Nomura

Analysts at Nomura expect the University of Michigan consumer sentiment to stay elevated in November after it improved further in October.  

Key Quotes

“The consumer sentiment index reached 100.7 from 95.1 in September, as more consumers provided an optimistic assessment of current economic conditions relative to September. We expect consumer sentiment to stay elevated as the job market remains favorable and healthy income growth continues. The median of 5-10yr inflation expectations was steady at 2.5% (revised up from the preliminary estimate of 2.4%).”

“US budget: The October budget statement from the Treasury will mark the beginning of fiscal year (FY) 2018. During FY 2017, the budget deficit increased to $666bn from $586bn during the previous fiscal year. In June 2017 the CBO estimated a somewhat smaller deficit in FY 2018 ($563bn) owing to a modest increase in individual income tax payments. Historically, outlays outpace receipts in October. Thus, a budget deficit during the first month of FY 2018 would not be unexpected.”