Consumer confidence rose more than expected in January to its highest level in eight months, helped by growing optimism about the economy and the jobs market, according to a private sector report released on Tuesday.
TOM SAMUELS, MANAGING PARTNER, PALANTIR CAPITAL MANAGEMENT, HOUSTON:
This plays into a rising tide of optimism, where enough time has passed where markets have been rising steadily that people are feeling less tense. You're also seeing the same kind of bounce in (President) Obama's approval numbers.
We're still getting very soft real estate numbers, so economically it doesn't seem there's much reason for increased optimism, but I think this could continue into the spring.
ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:
Looks like the improvement in the stock market, better labor market conditions and signs of greater collaboration in Washington are starting to improve consumers' moods.
In level terms the number is still very depressed so we have a long way to go. It is still a glass-half-empty view of the world. But we're moving in the right direction and it is consistent with other evidence that the recovery is gaining some traction.
It is a fairly sizable surprise so it should be negative to the bond market and favorable to stocks to some degree.
TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
This report is a good way to start the year.
This report has a very good correlation with the employment backdrop. Given the fact that the employment backdrop seems to be improving to some extent it's not a big surprise that you're seeing some improvement in this report.
The one thing that caught our eye is the fact that the 12-month inflation rate is 5.5, which is the highest since July '09. If you look at this on a trend basis, it's actually rising, so that's one thing you need to keep an eye on.
The move higher in Treasury yields started before this report came out but I think it'll help move that along.
BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY
The UK news overnight was a reminder that it's really growth that matters right now, and we saw stagnation in the UK during the fourth quarter. That also puts a spotlight on ongoing weakness in peripheral Europe and probably diminishes ECB rate hike expectations. But in the U.S., we've got a strong consumer confidence number, so the story comes back around to the U.S. economic outlook, which looks stronger than Europe's or the UK's. That should bode well for the dollar against sterling and the euro.