Today’s Focus
The global macro conversation on Monday is anchored by durable goods. The 1.6% headline jump for June screams resilience, especially when set against the sharp 4.5% contraction in May that had rattled sentiment. It is a signal that US capital expenditure plans are not rolling over, even with the Federal Reserve keeping rates elevated.
But this is not just a headline number. The core measure — non-defence capital goods orders excluding aircraft, a proxy for real business investment — rose 1.4%, ahead of the 1.3% expected. That says corporate America is still swiping its credit card on equipment and technology, a theme that dampens fears of an imminent recession and, crucially, pushes back the timeline for any Fed rate relief.
In Germany, the Ifo number provided a modest sigh of relief for Europe. A rise to 84.3, from 84.1, is hardly a celebration, but it breaks a run of declines and suggests that the industrial gloom in the eurozone may be bottoming out. For the European Central Bank, it offers a sliver of comfort that its restrictive stance is not breaking the economy, but it is nowhere near strong enough to alter the rate path.
The combined message for global money is that the ‘higher for longer’ narrative has fresh legs. Equities are not getting the rate relief they have been hoping for, but they are being offset by a macro environment that is not collapsing. The risk is that bond markets take the durable goods beat as a reason to push long-end yields higher, tightening financial conditions without the Fed lifting a finger.
