The September readings of the Ipsos Consumer Sentiment surveys showed the GDP weighted global composite rebounding firmly to new highs – following in the footsteps of global equities; which have also moved on to new highs.
The strength was driven by emerging markets, with the EM index up 1.4pts and the DM index up just 0.4pts. China, India, and Brazil were the main sources of strength. The strength in emerging market economies has been surprising (to some), and logical to us as we have observed a clear and material monetary policy easing in aggregate for emerging markets, rebounding global trade growth, and stable commodities and currencies.
The strength in emerging markets has also helped drive global equities higher, and EM equities have been a solid performer this year. This improved economic and market performance by emerging markets has also been a contributor to lower economic and market volatility. I previously noted that while global equity volatility looks to be bottoming, it can take a while before this becomes an issue (e.g. it bottomed 2 years before the global financial crisis), and economic policy uncertainty has also been coming down - another byproduct of better/benign cyclical macroeconomic conditions. So the music stays on.
The Global composite Ipsos Consumer Sentiment index has risen to a new all time high in September.
Consumer sentiment is outpacing business confidence, and if the consumer sentiment indexes can drag the manufacturing PMIs higher it would see an acceleration in global growth which would be inflationary and push up bond yields, so this is a key chart to have on your radar.
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