Markets Stutter Ahead of Durable Goods, Beige Book

Futures are slightly extending the decline seen yesterday after earnings were mixed and consumer confidence fell below analysts’ forecasts. Today, the major news is durable goods orders at 8:30, and two hours before markets close the Federal Reserve will release a detailed economic summary in the Beige Book.

With futures looking down, it didn’t help that the morning began with news from the Mortgage Bankers Association that two weeks of rising rates caused demand for loan applications to drop 6.3% last week.

A positive report for durable good orders could certainly turn investor sentiment around.

Key Releases Today:

8:30 — Durable Goods were surprisingly upbeat in May but the maxim that one month of data doesn’t make a trend is expected to be given credence when orders fall by 0.5% in June.

“With Chrysler and many GM plants shut for most of June, total orders likely pulled back a bit,” said analysts at BMO Capital Markets. “Excluding aircraft and defense, capital goods orders are expected to retrace part of the prior month’s surprisingly large advance. This should indicate that business equipment spending is still contracting, albeit at a slower pace.”

While total orders are set to fall half a percentage point, orders should be flat once the transportation sector is excluded. 

Not all analysts are pessimistic though. “The ISM survey suggests core orders will rise, but a pullback in the defense sector means we expect total orders to rise only 0.5%, with orders ex-transport up about 0.7%,” said the forecasting team at HFE, who expect Q2 GDP to have risen by 1.0%. 

8:30 — William Dudley, President of the New York Fed, a position that grants a permanent voting bloc on the FOMC, speaks on growth and inflation before the Association for a Better New York.

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