U.K. Gilts and Indian Equities (and Rupee) in Play

Consumer gloom deepens beneath a still-bullish market tape; U.K. gilts and silver climb

Key Takeaways

• U.K. Gilts Rally as Further BoE Cuts Loom: U.K. gilts are rallying nicely today, and the outlook is bullish, with employment contracting, wage growth easing, inflation rolling over, and a looming austere fiscal budget. More BoE rate cuts are surely coming, after last week’s close decision to stand pat.

• Consumer Sentiment at Record Lows: We were on the receiving end of that epic University of Michigan consumer sentiment report, where the headline came in at the second-lowest level in the 73-year history of the series, and was far below the lows posted in all recessions dating back to the early 1950s. Sentiment is at a record low for the low-income households, and now this loss of confidence is bleeding into the middle class.

• Consumer Credit Growth Stalls: U.S. consumer credit was weak in September, managing just a +0.3% MoM increase after a flattish August. The YoY trend has been pared to nearly 0% from over +2.0% a year ago, and a near +4.0% trend two years back. In a sign of fledgling confidence, consumers are shunning their credit card usage as outstanding balances were little changed on the month, after a -0.5% MoM net decline in August, and the YoY pace is now running at -2.6%.