Market Wrap – Market relief over US data

Markets briefed a sigh of relief this afternoon after US manufactured durable goods data came in better than anticipated, pushing back fears of an imminent recession.

Minor losses were seen in the greenback as risk appetite improved, while US stock markets edged higher, with the Nasdaq leading the charge with gains of over 1%.

Breaking down the durable goods order data, new orders for US manufactured durable goods declined 0.2% month-over-month in August of 2022.

This followed a revised 0.1% drop in July and compared to market forecasts of a bigger 0.4% fall. Transportation equipment, also down two consecutive months, drove the decrease, namely nondefense aircraft and parts, which cratered by-18.5%.

Other minor declines were also seen for fabricated metal products and nondefense capital goods. However, increases were seen in orders for defense aircraft and parts, up 31.2%, while defense capital goods grew by 10.1%.

Orders for non-defense capital goods excluding aircraft, a proxy for investment in equipment, jumped 1.3%, much higher than 0.7% in July, and beating forecasts of a 0.2% rise.

Fed Chair Powell also spoke this afternoon, although the Federal Reserve head did not move broader financial markets as he was actually touching upon digital assets.

Speaking on digital financial Powell said, “We would need permission from executive branch and congress to proceed” and “We’re evaluating policy and technology issues of a US central bank digital currency, no decision on whether to proceed for some time”.

The Federal Reserve’s Charles Evans has also been speaking today. Evans said that “My outlook is roughly in line with Fed median assessment of rates at 4.25% to 4.50% at year-end”.

Evans also added that “At some point, it will be appropriate to slow the pace of rate increases and hold rates for a while to assess the impact on the economy”.

Bitcoin is not reacting to Powell’s latest speech and was already up 6.5% intraday. Digital assets have started to decouple somewhat from broader financial markets this week.