Durable Goods Orders Decline 6.3% in April, Exceeding Expectations

April Durable Goods Data

• 📉 April's preliminary durable goods orders saw a decline of 6.3%, which was less severe than the anticipated 7.8% to 8.2% drop.
• 📈 This follows several months of strong performance, with previous figures for March revised upwards from 9.2% to 7.5%, and then to 7.6%.
• ✈️ A significant portion of the recent strength in durable goods was attributed to transportation and aircraft.

Core Durable Goods Performance

• ⚙️ Excluding transportation, the 6.3% decline in durable goods actually improves to a positive 0.2% increase.
• 💰 This indicates that while overall orders dipped, the underlying trend excluding volatile transportation sectors remained positive.

Capital Goods and Shipments

• 🏦 Non-defense capital goods orders, excluding aircraft (a proxy for capital spending), experienced an unexpected 1.3% decrease, marking the lowest point since September 2022.
• 📦 In contrast, shipments saw a slight 0.1% decrease, as expected, following substantial boosts in previous months.
• 📈 Shipments have shown strong growth, with figures of up 0.5% in the rearview mirror, following a 0.6% increase in February.

Interest Rates and Global Markets

• 📉 Interest rates have shown a downward trend, particularly on the long end, influenced by global supply issues, notably from Japan.
• 🇯🇵 Japan's efforts to control interest rates are becoming complicated, potentially leading to issues that could affect global markets.
• ⚠️ The 20-year bond auction last week highlighted the market's sensitivity to supply, indicating increased attention on this factor for 2025.
• 🇺🇸 Despite global complexities, the US is seen as a relatively stronger issuer in terms of quality and credit, even with its debt and deficit concerns.
• 📊 The recent pop in interest rates is considered by some to have been overblown, with potential for rates to remain below 5% regardless of actions by countries like Japan.