Markets Await Upcoming Economic Data

Rates rise slightly ahead of a busy week. Swap rates rose 1-2bps across the curve today in a quieter rates session. Higher than expected durable goods orders in July (9.9% versus 5.0% expected and -6.9% in June) did little to sway rates, as the ~3bp decline in the data’s aftermath was offset by a gradual rise in the afternoon. Markets are largely looking ahead to Thursday’s GDP and Friday’s PCE reports, where the former is expected to show 2.8% economic growth in 2Q24 and the latter is expected to rise by 0.1% on a year-over-year core basis.

Aircraft orders surge while business equipment orders fall in July. Durable goods orders skyrocketed by 9.9% in July versus surveyed estimates of 5.0% growth and June’s 6.9% decline. Resurgent transportation equipment orders (specifically aircraft) largely drove the climb. Excluding the transportation sector, orders actually fell 0.2%. Another data point released today measuring orders for capital goods declined 0.1% in June, implying some hesitation among firms about making longer-term capital investments due to uncertain economic and political conditions.

Oil prices are under pressure following fresh airstrikes in Lebanon and Israel. Tensions between Hezbollah and Israel escalated over the weekend, leading to airstrikes in both Israel and Lebanon. Hezbollah said that their strikes were aimed at military bases in northern Israel, launched in retaliation for the assassination of Fouad Shukur last month. Israel stated that their strikes were meant to preempt imminent attacks from Hezbollah. While tensions calmed today, the aerial assaults could result in a longer-term war. Brent and WTI crude oil prices rallied today as a result, up 2.80% and 3.20%, respectively.