Consumer Confidence Rises to 5-Year High, Spurs Stock Markets

The consumer confidence index was released today at 76.2, the highest it's been since February of 2008. April's index came in at 69 and a year ago the index read 64.9. This suggests that US consumer's are doing well despite the actions in Washington, showing resilience that points to signs of strength in the US economy. Additionally, home values hit their highest levels in six years. "Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll tax hike and sequester," Lynn Franco, director of economic indicators at The Conference Board, said in a statement. Not only was consumer confidence high but prices for homes across the country rose as well, reinforcing the idea that the US is doing. During the first quarter the Standard & Poor/Case-Schiller home price index for the nation rose 10.9% from a year earlier, the largest gain since April 2006.

Initially up 208 points, the DJIA shaved points during the later part of the session but still managed to close triple digits positive for the day, extending the blue-chip index's gains to twenty straight sessions. The last time this happened was the 15 straight gains posted in 1927. The S&P recorded gains of about 10 points, closing at 1,660.06, the Nasdaq posted gains of 29.74 to 3,488.89, all in all recording gains for the past ten consecutive days. 

The biggest story was perhaps in the bond market, as analysts are picking through the Fed speakers' comments, reigniting fears that the bond purchasing program will be ended soon. This is leading to an increase in yields, creating a more bleak outlook for the bond market in general. As shown in the image below, the channel that has contained the US 10 yr Yield since August '12 looks to offer resistance around the 2.155% area, but continued US strength through positive reports could lead to a subsequent breakout of those levels. Current US 10 yr yields are around 2.122%. Close-by levels to watch out for are 2.136% (filling the April 2012 gap), 2.155% (channel resistance), 2.178% (78.6% retracement of 2012 decline) and finally 2.191 ( 38.2% retracement of 2011-12 decline).