Daily Commentary BY THE CURVE TEAM –

Covid Impacts Confidence

21st of January, 2021

As expected, consumer confidence was hit in December, but the extent of the impact was of interest.

Consumer confidence dropped 4.5% for December. This comes as no surprise given the covid outbreaks towards the end of the month, which prompted border closures.

Not only this, but November confidence hit extreme highs so some semblance of regression to the mean would be expected. November’s levels hit 10-year highs, which seems hard to fathom in the middle of a pandemic, granted there had been positive vaccine news.

It would be expected that confidence would level out at some point, arguably by even more than December. December confidence stands at 107 which remains 14.6% higher than the same time last year.

Even the unemployment expectations index, which jumped 11.9% for the month is the lowest its been for 10 years with the exception of November. Family finances for the next 12 months was little changed, only down 0.3%.

Overseas, Biden was sworn in as president of the US. Most relevant to the economy will be whether he passes a stimulus bill, which would amount to nearly 14% of GDP.

Such a large stimulus risks provoking inflation. Today employment data for December will be released.

Josh Stewart

Associate- Money Markets