The Conference Board issued the Consumer Confidence Index this morning, which dropped from 56 to 46, the lowest in ten months and the biggest one-month drop in history, even larger than after 9-11. There have been grumblings about their methodology for many years, but today’s reading is so un-realistic that I feel safe in dismissing it.
This afternoon, many of us were watching the Treasury’s sale of $40 billion in 2-year bonds. When they have trouble selling bonds, interest rates will likely start rising. To everybody’s relief, there was a huge demand. In fact, they could have sold $3.33 for every $1 they wanted to sell. However, I think that is also misleading, as investors who were spooked by the weak reading on the Consumer Confidence report this morning, ran to the safety of Treasury bonds this afternoon. This is a good day to simply ignore the data! I still expect the market to trade within a 10% band until the middle of the year, before beginning a slow rise. We’ll see . . .