INSTANT VIEW: U.S. consumer mood improves in May

NEW YORK (Reuters) - U.S. consumer confidence rose in early May to its strongest since the September failure of Lehman Brothers, with rising expectations the economy may be in the last stages of the recession, a survey showed on Friday.

KEY POINTS: * The Reuters/University of Michigan Surveys of Consumers said its preliminary index of confidence for May rose to 67.9 from 65.1 in April. This was above economists' median expectation of a reading of 67.0, according to a Reuters poll. * The index of consumer expectations jumped to 69.0 in early May, its highest since October 2007 and up from 63.1 in April.

COMMENTS:

BILL HAMPEL, CHIEF ECONOMIST, CREDIT UNION NATIONAL ASSOCIATION, WASHINGTON, D.C.:

"This is another inching along sign that things are getting better. This consumer sentiment number had been in a range for the last year and now it looks like it's breaking above that range. The Reuters/University of Michigan index is less affected by the labor market than the Conference Board consumer confidence index. It is more affected by financial markets so this reading reflects consumers' reaction to the improving stock market. What it means is that consumer spending will not be dragging the economy deeper into recession. It's one more nice piece of evidence that the worst is behind us."

JOSEPH LAVORGNA, DEUTSCHE BANK, SENIOR ECONOMIST, NEW YORK:

"The reading is consistent with everything else we've seen with respect to measures of sentiment. The sentiment indicators all reflect the massive rally off the March lows in equity prices. If the equity market can hold its footing I think we've seen a low in sentiment."

TERRIN GRIFFITHS, ECONOMIST, CALIFORNIA CREDIT UNION LEAGUE, ONTARIO, CALIFORNIA:

"It looks like people are starting to feel better about what they expect going forward. They remain pessimistic about the present due to job losses and they won't feel better about the present until those job loss numbers improve substantially. But the perception has become more positive about what we have in the future. People are feeling that this is a temporary situation and that there are things to be optimistic about ahead."

BRIAN BARTSCH, EQUITY TRADER, COHEN CAPITAL, NEW YORK:

"Bad news is good news and good news is bad news. We all know confidence is up, and you can tell that by the market itself. We know everyone's confidence has risen in the marketplace -- but then consumer confidence went up, and we came down from there."

TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK FINANCIAL LLC, PRINCETON, NEW JERSEY:

"Consumer confidence has nearly retraced all of its losses going back to March of 2008 when the number was 69.5. The only exception was the one time print of 70.3 for September of 2008. Expectations are steadily improving for the consumer despite the high unemployment rate. The reason being that stocks are off of their lows and lower mortgage rates are allowing for refinancing. Also, bank failures are less of a fear and other economic indicators are much better than expected. We are out of winter and home price affordability is at or near an all time high."

ANDREW RICHMAN, FIXED INCOME STRATEGIST, SUNTRUST PRIVATE WEALTH MANAGEMENT, PALM BEACH, FLORIDA:

"The more data we are seeing, it's not a doomsday scenario. Yes we are still in a recession, but we may be in the stage of pre-recovery. All the data have been encouraging.

"Treasuries are off only a little. Ten-year yields are still rangebound. The inflation as showed by the CPI is still minimal, and people have been selling off Treasuries."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

"I think the numbers continue some of the data we've seen elsewhere. The information is getting less bad and some of the worst fears haven't come to pass. But as we go through the summer data we will remain volatile as people will watch home sales and inventories to see if there's a build up.

"This won't be a market mover. We'll see a fairly quiet market today. It's more or less stand off between the people who think the market has gone too far and the others."

MARKET REACTION: STOCKS: U.S. stock indexes hold gains BONDS: U.S. Treasury debt prices hold losses DOLLAR: U.S. dollar holds gains versus euro