In the lowest score since last November, consumer sentiment fell more than 2 points to 66.0. Assessments of both current and future conditions eased, down nearly 2 points for the former to 64.1 and down more than 2-1/2 points for the latter to 67.2.

The report cites high prices as a negative though inflation expectations are cooling, down a tenth for both the 1-year and 5-year outlooks to 2.9 percent for each. This, along with the weakening in the headline index, are favorable points for a rate cut.

The report also cites uncertainty tied to the presidential election as a negative, though it notes there was no significant reaction to the June 27 presidential debate.

In the first indication for July, consumer sentiment is expected marginally better at 68.5 from June's 68.2. Year-ahead inflation expectations are also expected to hold unchanged, at 3.0 percent.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.