U.S. consumer sentiment saw no improvement this month, with October's preliminary reading coming in at 55.0 vs. 55.1 in September and 58.2 in August. This compares to the consensus of 54.0 in the Econoday survey of forecasters.

There has been little shift in the dour outlook for the economy, while the ongoing government shutdown for the moment has not influenced sentiment.

"Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers' minds, the report said. At this time, consumers do not expect meaningful improvement in these factors.

Meanwhile, interviews reveal little evidence that the ongoing federal government shutdown has moved consumers' views of the economy thus far, it added.

The final year-ahead inflation expectations dipped to 4.6 percent in October, from 4.7 percent in September.

Long-run inflation expectations in October was unchanged at 3.7 percent from last month. Inflation expectations for both time horizons are about midway between the readings seen a year ago and the highs seen this year in April and May in the wake of the initial announcements of major tariff changes, the report said.

The first reading for October is expected to show another decline to 54.0 from 55.1 in September and 58.2 in August as consumers fret over rising prices and weakening employment prospects.

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.