- Durable goods orders represent investment and are closely watched.
- The publication is usually a warm-up to the GDP report, but Trump stole the show.
The US publishes the Durable Goods Orders report on Thursday at 12:30 GMT. Orders of durable goods are closely watched by the Federal Reserve as the publication provides a long-term view of the economy. The Fed looks to the medium term.
The upcoming release is for June, the last month of the second quarter, and the event takes places 24 hours before the US publishes the first estimate of Gross Domestic Product for the period. As the data feeds into the GDP figures, any significant surprise in Orders can impact expectations for the following day.
However, this time is different. US President Donald Trump and his aides at the White House leaked the data to be just under 5% annualized growth and understood to be 4.8%. The Fox News report implies a growth rate which is significantly high and considerably above expectations which were at 4%.
So, the data is of interest by showing us the recent developments in the economy but will not change expectations for the GDP.
Things may work the other way around: Trump's leaks may serve to indicate a robust Durable Goods Orders number.
Before the leak, estimates stood at a jump of 2.5% in headline orders. Such a leap is not surprising in the headline number which dropped by 0.6% in May. Core orders carry expectations for a rise of 0.3%, the same scale of the drop in the previous month. Core Durable Goods Orders tend to have a broader impact than the volatile headline.
After the leak, expectations are probably higher. So, if the original expectations are surprisingly met, it would be a disappointment under the new consequences. More importantly, given the advance notice of GDP, the market reaction is harder to predict.
However, upbeat data would strengthen the US Dollar on elevated expectations for a faster pace of rate hikes. Soft data would do the opposite. And also here, it is important to remember the impact of the President. Trump recently complained about high rates and wanted to see a weaker US Dollar.
There is one certainty: Trump will continue moving markets.
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