James Knightley, chief international economist at ING, points out that the recent readings of US durable goods orders haven’t been encouraging as headline orders were firmer than expected, rising 0.2%, but we focus on the so-called core reading – non-defence capital goods orders excluding aircraft.
Key Quotes
“This obviously strips out the two big swing (volatile) components of aircraft and defence and showed a decline of 0.2% month-on-month after a flat reading of July.”
“This offers further evidence that the attritional nature of US-China trade tensions is having an impact on US industry. Higher tariffs puts up costs and disrupts supply chains while hurting corporate profitability. This is now clearly hurting sentiment and making firms more reluctant to invest and hire new workers.”
“We will get more news from the US manufacturing sector next Tuesday with the release of the ISM index. Here we may see a bit of temporary good news, but it shouldn’t be overstated in its significance.”
“We expect further interest rate cuts from the Federal Reserve despite the relative strength of the consumer sector. We look for a December rate cut with another 25bp move in 1Q20.”
Share
