Consumers were slightly less confident on the economic recovery in early June after stock markets across the globe fell and tax hikes hit households - Image credit: via @daylife  The now-controversial Thomson Reuters Thomson Reuters/University of Michigan consumer sentiment number was released Friday morning, showing a slight decline in June over May, when the index hit its highest levels in nearly six years. The number, which is leaked early to high-frequency traders for a fee, was dragged down by the current conditions part of the equation, as consumers recalibrated their views on the recovery after recent market weakness and a surge in global volatility.  Consumer sentiment ticked down to 82.7 in early June, falling from a post-crisis high of 84.5 in late May, and failing to meet consensus. Confidence eroded most among lower-income households, the report showed, as consumers were less optimistic about job prospects. Confidence was hurt by tax hikes and the sequester, according to High Frequency Economics’ chief economist Jim O’Sullivan, who noted the number remains elevated given tame inflation, rising wealth, and a decent labor market.  The index for current economic conditions was responsible for June’s decline, as it fell to 92.1 from 98 in May. In part, that could reflect the recent stock market rout, as global equities have been on a downtrend since May 22, when Fed Chairman Ben Bernanke indicated he could scale back quantitative easing over the next couple of FOMC meetings.  Consumer expectations, the index’s forward looking element, ticked up to 76.7, its highest levels in seven months. One-year median inflation expectations rose 0.1 percentage points to 3.1%, as did five-year inflation expectations which hit 3%.  The report was marred in controversy over the past few weeks as CNBC reported Reuters offered high-frequency traders a glimpse at the report ahead of time for a fee. Public documents showed so-called “elite traders” were getting access to the number a full two seconds before the release through an “ultra low latency distribution platform.”  It became especially relevant after the May 17 release, when the index surged to a post-crisis high and markets took off. Within 10-second of the release, about $100 million had already changed hands, CNBC said.  Friday’s reading was less controversial, despite sparking a 48 point jump in the Dow, which was quickly reversed. All three major U.S. equity indexes were marginally in negative territory in early trading after having jumped on the report and then retracing those gains. The yield on 10-year Treasuries was falling as well, having hit 2.11% by 10:47 AM in New York while gold was up 0.7% to $1,387.20 an ounce. The VIX, a measure of volatility which has been making its way higher since late-May, was down 1% to $16.25
Consumer sentiment fell in early-June from a post-recovery high in May as stocks have turned south in the aftermath of Fed Chairman Ben Bernanke's indications that he could taper his asset buying program soon, and as tax hikes continued to make their way through the economy.