Demand for a range of long- lasting U.S. manufactured goods rose more than expected in September to post the largest increase in six months, cementing views of a step-up in economic growth in the third quarter, even though new orders for transportation equipment fell.
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT
This was a mixed report overall but a bit better at the core level...the slide in September on a month-on-month basis does hint at a softer entry to Q4, but really remains to be seen. Too, the broad gains to orders aside from transport is something of an offset. But we'd skew this as balanced. And the market does, too, with prices little changed with no coupon more than 1 basis point higher. With that the long end is underperforming but really the impact has been nil.
JACOB OUBINA, SENIOR ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
Non-defensive, ex-aircraft figures came in stronger-than-expected so it's constructive in that sense. We could even have a stellar fourth quarter in capital spending, but other indicators are flashing warning signs. These other metrics suggest that early 2012 could be challenging for capital spending.
MIKE SHEA, A MANAGING PARTNER AND TRADER AT DIRECT ACCESS PARTNERS LLC IN NEW YORK
The number wasn't bad, and having a decent number in durables is far better than having a bad number, since with the overhang of Europe, if we were getting lousy data here, then we wouldn't have anything to hang our hats on.
If not for what was going on in Europe, this market would be running on all cylinders. The summit in Europe is the tradable event. We could have one hundred percent earnings positive surprises today, we could have great economic data come out, all of that could come in rosy domestically, but if the news out of Europe is judged to be bad, none of what happens in the U.S. will matter. This market will not shrug off a lousy plan coming out of Europe. It will not shrug off any plan that is not fundamentally based in reality.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
While the overall September durable goods orders outcome of -0.8% was in line with market expectations (-0.9%) after an unrevised 0.1% decline in August, outside the volatile transport sector the data shows surprising strength, with a rise of 1.7%, keeping trend clearly positive after a 0.4% decline in August (revised from -0.1%). The data shows encouraging strength outside transport, where aircraft were correcting from very strong data seen in both July and August. While the orders data should boost optimism on the US economy, shipments and inventories data were less impressive, so Q3 GDP projections are unlikely to get a lift from this release.
STOCKS: U.S. stock index futures keep earlier gains.
BONDS: U.S. bond prices hold earlier losses.
FOREX: The dollar maintains earlier losses versus the euro.