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US Durable Goods Orders Rise Significantly

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US Durable Goods Orders Rise Significantly

The US Census Bureau and the Department of Labor have just published updates on North America’s economic situation. The headline figure is the March Durable Goods Orders which has come in at 2.6%, up from last month’s 2.2% and beating the market consensus estimate for 2.0%. When transportation is stripped out from this data the reading becomes 2.0%, again significantly up on the revised February figure of 0.1% and also well ahead of the anticipated 0.6% reading.

On the jobs side the Initial Jobless Claims for the week of April 18th have come in at 329k, this is slightly higher than the previous week’s 304K and also above the 310k that was expected. The Continuing Jobs Claims for the week of April 11th have been released as 2.68M, lower than the prior reading of 2.739M and once again below the expected 2.750M.

Today’s data on it’s own is unlikely to influence the Federal Open Markets Committee (FOMC) when it meets next week to discuss US monetary policy. The prolonged run of positive US data however is likely to have bearing discussions, particularly the falling unemployment and rising inflation metrics.

The formal link between inflation, unemployment and interest rates has now been broken, the Fed previously stated that once inflation hit 2% and unemployment fell below 6.5% then rate rises would begin. Although both of these indicators are now clearly heading towards the stated target levels the FOMC has stated that policy would remain ‘accommodative’.

Direct interest rate action from the Fed is not anticipated next week, if any formal decision is announced it will most likely be around the speed of the bond buyback program. Rather than seeking direct action it is more probable that Fed watchers will be on the lookout for any change in the Feds stance, particularly an update on what ‘accommodative’ implies in the context of improving economic conditions.

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