Year-ahead inflation expectations increased from 2.6% in November to 2.9% in December, reaching the highest level in six months. Long-run inflation expectations declined from 3.2% to 3.1%.
The University of Michigan commented: “A surge in buying conditions for durables led Current Economic Conditions to soar more than 20%. Rather than a sign of strength, this rise in durables was primarily due to a perception that purchasing durables now would enable buyers to avoid future price increases.”
U.S. Dollar Index tested session highs after the release of the better-than-expected Michigan Consumer Sentiment report. Currently, U.S. Dollar Index is trying to settle above the 106.00 level.
Gold settled near the $2635 level as traders focused on strong U.S. dollar. Interstingly, Treasury yields are moving lower, providing some support to gold markets.