US Economic Data: Jobless Claims Drop, Durable Goods Rise, GDP Revised Upward

Economic Data Highlights

• 📉 Initial jobless claims fell to 218,000, significantly below the estimated 234,000, marking the lowest figure since the third week of July.
• 📊 Continuing claims remained stable, consolidating around 1.9 million.

Durable Goods and Business Spending

• 📦 The headline durable goods number showed a significant 2.9% increase, though this was influenced by preliminary August data and volatility in prices, tariffs, and inventories.
• 🚚 Excluding transportation, durable goods orders were stronger, rising by 0.4%, the best performance since the previous month's 1% increase.
• 📈 Non-defense capital goods orders, a proxy for business spending, also showed strength, coming in at 0.61% compared to 1.0% in the prior month, with back-to-back strong numbers.
• 🚚 However, shipments moved in the opposite direction, declining by 0.3%.

GDP and Consumption Revisions

• 🚀 Q2 GDP received a solid upward revision to 3.8%, the best quarter since Q3 2023's 4.4%.
• 💡 While Q1 GDP was revised down to -0.5%, the momentum is shifting towards better growth.
• 🛒 Consumption also saw a significant upward revision, increasing from 1.6% to 2.5%.

Inflation and Trade

• 📈 The GDP price index increased by 0.1% to 2.1%, and the core PCE also moved up by 0.1% to 2.6%.
• 🌍 The trade deficit narrowed to -$85.5 billion in August, a significant decrease from historic highs seen earlier in the year.

Inventories and Market Reaction

• 📉 Wholesale inventories unexpectedly fell by 0.21% in August, contrary to expectations of a positive number.
• 🛍️ Retail inventories remained unchanged, indicating a potential slowdown in inventory build-up.
• 📈 The strong jobless claims data is expected to put upward pressure on interest rates, with yields potentially testing 4.35% before 4%.
• ⚠️ Investors are closely watching bond auctions, particularly the seven-year note auction, to gauge demand amidst significant global debt issuance.