Durable goods orders seen rising again in July

Good morning,

• Dovish Draghi sends the S&P through 2,000;

• Durable goods orders seen rising again in July;

• Consumer confidence expected to fall but remain at high levels;

• House price rises could slow in coming months.

US futures are treading water ahead of the opening bell on Tuesday, as we await a couple of important economic releases that should provide further insight into the strength of the economic recovery.

The week got off to a great start following Mario Draghi’s dovish speech on Friday, which spurred the S&P on to reach 2,000 for the first time ever. Understandably, the index ran into significant resistance at this level and failed to close above it. We may see it take another run at it today, but that is likely to depend on the quality of US data the is due for release.

First up is core durable goods orders for July, which will be released before the open. These numbers give great insight into confidence in the economy as they focus on goods that last three years or more, something both people and companies only invest in when they are comfortable with the economic outlook.

While the numbers can be quite volatile, they’ve actually been very good for this year, only once showing a drop in orders and that was by a measly 0.1%. We’re expecting another 0.5% gain for July which would be further evidence that the recovery in the US is both strong and sustainable.

This should be supported by a strong consumer confidence reading shortly after, although the number is seen edging lower to 89, from 90.9 last month. This is still a great number and very close to the near seven year highs hit last month which is interesting given the depressed growth in wages in the US. Maybe this is a sign that wage growth isn’t as big an issue as the Fed believes, possibly due to the fact that inflation has also been very low for a long period of time, meaning real wage growth is actually not too bad, especially when compared to the UK.

We’ll also get some more housing data today, with the house price index and the S&P/Case-Shiller house price index being released. These are expected to show another increase in house prices, although I expect this to once again slow in the coming months as mortgage rates start to creep up again.

US indices are expected to be relatively flat this morning, with the S&P unchanged, the Dow up 7 points and the Nasdaq up 1 point.