US: Easing in COVID cases boosted optimism – Wells Fargo

US economic data released on Tuesday came in above expectation, with a Consumer Confidence measure rising unexpectedly. According to analysts at Wells Fargo, favourable views of the labor market helped to fuel gains in both the present situation and expectation measures and lifted the Consumer Confidence headline index to 113.8 from 109.8. 

Key Quotes: 

“Consumer confidence rose for the first time in four months, jumping four points to 113.8 in October, as concerns that drove confidence to a seven-month low in September eased. COVID cases are again receding from their more-recent peak and the onslaught of negative news in September, which ranged from natural disasters to fiscal uncertainty and the wind-down of the war in Afghanistan, has subsided. There was an improvement in consumers views of both current conditions and expectations for the future.”

“Higher optimism around income may be boosting spending in the near-term. Retail sales surprised to the upside in September, and while some of that is likely due to higher prices, it is an indication demand has not fallen off a cliff headed into the holiday shopping season. Buying intentions suggest a similar conclusion, as plans to buy automobiles, major appliances and even homes over the next six months all improved from September.”

“On Friday, we'll get the personal income & spending report for September which will shed some light on the price versus spending dynamics. Even if spending intentions to not materialize, and we see lackluster sales to end the year, holiday sales are still set for a record year-over-year gain this year.”