Durable Goods orders rose 9.9% this month, which is a marked departure from the downtrend ending last month with a -6.9% showing. Durable goods are just what it sounds like: stuff we buy that is supposed to last longer than a year. Where most of that stuff is expensive, this is a sign that the economy isn’t slowing down as much as it was made to seem last week.
We’ll see Consumer Confidence tomorrow, GDP in Thursday, and the wildly anticipated PCE on Friday. The Fed’s favorite gauge of inflation measured 2.6% last month and it’s expected to rise to 2.7% this month before ending the year at 2.8%. Since the Fed is already planning to cut rates even with the understanding that PCE is on the rise, we won’t be too alarmed at the increasing inflation numbers.
One more thing that ordinarily can cause alarm but shouldn’t in this case is the Fed auctioning off 175B of their bond holdings tomorrow. Generally speaking, that increased supply will put upward pressure on interest rates. However, given the near certainty of rate cuts next month which will raise the price of existing coupons, tomorrow’s auctions should be well received, thus keeping rates steady.
