Hump-day data part 2: Durable goods, jobless claims, et al

Reuters

Hump-day data part 2: Durable goods, jobless claims, et al

Nov 27, 2024 at 4:55 pm GMT

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Nasdaq, S&P 500 slump; Dow ~flat

Tech down most among S&P sectors; healthcare biggest gainer

STOXX 600 down 0.2%

Dollar down; crude ~unchanged; gold, up; bitcoin up >4%

US Treasury 10-year yield down at ~4.25%

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HUMP-DAY DATA PART 2: DURABLE GOODS, JOBLESS CLAIMS, ET AL

Aside from those two limelight hogs - GDP and PCE - investors had to contend with a plethora of economic also-rans before clocking out early and heading to the airport.

In no particular order:

New orders for long-lasting U.S.-made merchandise USDGN=ECI increased by 0.2% last month in a partial recovery from September's 0.4% drop and falling well short of the 0.5% consensus.

Digging deeper into the Commerce Department's durable goods report - which covers everything from waffle irons to attack drones - a rebound in commercial and defense-related aircraft orders, rising 8.3% and 16.6%, respectively, helped boost the upside, while a 2.5% drop in computer-related goods and a 4.0% decline in total capital defense goods weighed on the upside.

New orders for core capital goods - which exclude aircraft and defense and are considered a barometer of U.S. corporate capex plans - unexpectedly fell by 0.2%, on the heels of September's downwardly revised 0.3% gain.

"Core capital spending should pick up as interest rates come down, but that was not the story today," writes Carl Weinberg, chief economist at High Frequency Economics."

"Uncertainty has now taken on a new meaning, with threats of tariffs already spinning out of the incoming Trump administration, an uncertain course for tax and commercial policy despite slender Republican majorities in both houses, a potential Fed pause in rate reductions and an unclear supply of labor," Weinberg adds.

Speaking of the labor market, last week 213,000 U.S. workers joined the queue outside their local unemployment office USJOB=ECI, according to the Labor Department.

That's essentially sideways from the prior week's 215,000 and 3,000 fewer than economists projected.

"Initial claims remained lower last week than in the summer, but probably still are high enough to sustain the rising trend in unemployment, given the pronounced weakness of hiring," says Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.

Ongoing claims USJOBN=ECI, reported on a one-week lag, increased by 0.5%, suggesting that it might be taking recently fired workers longer to find a suitable replacement gig

"The recent pick-up in continuing claims broadly supports the idea that the flow of initial claims still is high enough for unemployment to continue to rise," Tombs added.

All of this tracks the recent deterioration in jobs confidence, as reported by the Conference Board:

Turning to the turbulent housing sector, signed contracts for the sale of pre-owned U.S. homes USNAR=ECI defied expectations by rising 2.0% in October.

Analysts predicted a 2.0% move in the opposite direction.

"Homebuying momentum is building after nearly two years of suppressed home sales." writes Lawrence Yun, NAR's chief economist. "Even with mortgage rates modestly rising despite the Federal Reserve's decision to cut the short-term interbank lending rate in September, continuous job additions and more housing inventory are bringing more consumers to the market."

Speaking of mortgage rates, the cost of financing home loans showed the good sense to finally ease up a bit last week, and mortgage demand gained some strength as a result.

The Mortgage Bankers Association's weekly report showed the average 30-year fixed contract rate USMG=ECI inched down a measly 4 basis points to 6.86%, marking its first decline since September.

That was enough to inspire a 12.4% jump in applications to purchase homes USMGPI=ECI, which handily offset a 2.6% drop in refi demand USMGR=ECI.

"Purchase activity drove overall applications higher last week, as conventional purchase applications picked up pace and mortgage rates declined for the first time in over two months," says Joel Kan, MBA's deputy chief economist.

Compared with the same week last year, the 30-year fixed rate has cooled down by 51 basis points. Over the same time period, purchase demand is up 5.5%, while refi applications have increased by 53.1%.

(Stephen Culp)

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