Prior was 61.3 • Prior was 74.0 vs 68.5 expected • Current conditions 74.0 vs 68.5 expected • Expectations 66.4 vs 57.0 expected • One -year inflation 3.1% vs 4.5% prior • Five-year inflation 2.8% vs 3.2% prior • This is a dream report. It's like a magic landing where the economy stays hot and inflation falls below 2% anyway. It would leave the Fed with 500 bps of ammunition despite inflation being on target. They'd have to re-write economic textbooks. (full story)

UMich inflation expectations (one year ahead) collapsed to 3.1% in preliminary December data after soaring to 4.5% in November. Medium-term inflation expectations also tumbled from 3.2% to 2.8%. That is the lowest one-year inflation expectation since March 2021. Who could have seen that coming? Back to reality... {chart} Consumer sentiment soared 13% in December, erasing all declines from the previous four months, primarily on the basis of improvements in the expected trajectory of inflation. The headline jumped from 61.3 to 69.4 with current conditions spiking from 68.3 to 74.0 and expectations jumping from 56.8 to ... (full story)