U.S-University of Michigan Consumer Sentiment (July )

Given all of the worrying headlines of late, as well as the wild gyrations in equity markets, it shouldn't come as a shock that U.S. consumer sentiment (as measured by the U of Michigan) fell in the first half of July. However, the headline's 2.8 pt drop to 93.3 was weaker than expectations, but the level remains above the 6-month low that was hit back in May. Indeed, Americans have been weighed down by scary headlines about Greece and China over the past couple of weeks (at a minimum), which had a negative impact on equity markets (although markets have rallied over the past few days, it was just a week ago that the Dow plunged over 260 pts to a 5-mth low).

Meanwhile, gasoline prices continue to edge up, there's talk of another budget fight this fall, which may lead to another shutdown in DC, and stronger economic growth leading to fears of higher interest rates as early as September. With that backdrop, there was an adverse effect on both 'current conditions' (-2.9 pts to 106.0) and 'expectations' (-2.6 pts to 85.2) to two-month lows. (Interestingly, the 1- and 5-year inflation outlooks inched higher as well). Although a few of these negative factors have eased, for now, don't be shocked to see some of the decline reversed by month-end, says BMO Economics.