Today’s U.S. June Durable Goods Orders fell 1% while economists expected a rise of 1%. The ex-Transportation (Core) number fell 0.6% from the prior month (Orders in May were also revised lower slightly from -0.6% to -0.8%). Later in the afternoon, U.S. July Fed Beige Book reported improvements in service industries, an increase in tourism, an expansion of manufacturing and overall labor market conditions progressed on the back of temporary hiring. Reports regarding retail sales generally indicated a continued rise in spending – with strong demand for everyday “necessities”, while sales of big-ticket items slowed (auto sales noted declines in recent weeks and activity in residential housing diminished after the expiration of the homebuyer tax credit). In closing, the Fed underscored their view that the economic recovery, while still moving forward, is progressing at a slower pace than earlier in the year.

Risk sentiment fell on these concerns over the weakness in overall orders and the Fed’s view of a slowing economic recovery. The S&P500 closed down 0.7 percent to 1,106.13, U.S. 10 year Treasury Yield fell 6bps to 2.99%, Precious Metals were mixed (Gold +0.2% & Silver -0.9%), Crude Oil fell 0.85% due to an unexpected inventory build of 7.3 million barrels and the USD Index finished the day unchanged at 82.10 (-.08%).

At the time of New York close the RBNZ raised their cash rate by 25bps to 3.00% as was widely expected. However, Bollard’s comments afterward were rather dovish; stating the overall pace of further rate increases may moderate and recent gains of the New Zealand Dollar were inconsistent with the current economic outlook. The NZD/USD fell 70 pips (from 0.7270 to 0.7200) at the time of this writing.

Things should continue to be rather busy tonight during the Asia session; New Zealand June Trade Balance, Japan June Retail Trade (Mom & YoY), Australia June New Home Sales and New Zealand June M3 Money Supply are all scheduled.