Wednesday, September 27, 2006

Durable goods, non-durable orders

So last week I was skeptical about the Philly Fed survey, as it seemed like an outlier. I thought yesterday’s Richmond Fed survey backed up my position, as it came in at a reasonably strong +9. But today’s Durable Goods number puts the bond bulls back in control. Overall goods orders came in at -0.5% vs. Bloomberg survey of +0.5%, and ex-Trans came in at -2.0% vs. survey of +0.5%.

So the 10yr was down 10 ticks yesterday, but is gaining it all back today. I’d say that short-term, the capitulation trade may continue, which means that sell-offs will be short-lived and buying will gain momentum over the course of a trading day. In order for the market to move definitively the other direction, we will need to get the capitulators out of the way, or get a clear signal from the Fed that there won’t be any easing soon.


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