The Day Ahead: Durable Goods, New Home Sales, Fed Speak
Benchmark interest rates are higher as U.S equity futures rally ahead of durable goods and housing data. In the afternoon, investors will also be reacting to three speeches from Federal Reserve officials, including Ben Bernanke who speaks thirty minutes after the close.
Just over one hour before the opening bell, S&P 500 futures are 7.50 points higher at 1,128 and Dow futures are trading 63 points up at 10,669. The 10 year Treasury note is -0-06 at 100-15 yielding 2.571%. The November delivery FNCL 4.0 is -0-02 at 102-17.
Key Events Today:
8:30 ― Economists anticipate Durable Goods to drop by 1.0% in August, following a 0.4% gain in July and a 0.2% decline in June. The culprit for the month’s decline is commercial aircraft orders, though economists at IHS Global Insight say computer and machinery orders could seem some bounce-back to offset that decline.
“The machinery sector probably won't reverse July's entire decline, but it should give a noticeable boost to core capital goods orders,” they wrote.
Meanwhile, analysts at Nomura go way against the consensus and predict a 1.5% jump in the month with broad-based increases.
“Although Boeing reported much lower orders in August, the Commerce Department's tabulation for the aircraft industry does not appear to have fully captured that strength,” they wrote. “We expect the August data to reflect some of July's surge in bookings.”
10:00 ― Like virtually every other housing index, New Home Sales sunk to new depths in July but are expected to see some bounce-back in August. The index fell a sharp 12.4% in July to an annual of 276,000 units, a fresh record low.
“That’s right, new home sales are currently below 1965 levels, when the U.S. population was 60% of what it is now,” said economists at BMO Capital Markets. “While the U.S. housing market appears to have stabilized, it has done so at extremely low levels, and the signs of life are limited.”
Economists believe sales should jump to 290k in August, though predictions range between 275k 320k.
“The most severe post-tax credit payback period for new home sales, which set a record low in July, is probably behind us,” said economists at IHS Global Insight. “With the economy and job growth slowly improving, we project a small improvement of around 5% in new home sales to 290,000.”
1:00 ― Jeffrey Lacker, speaks on economics and policy to the Kentucky Economic Association in Frankfort, Kentucky.
2:00 ― Charles Plosser, president of the Philadelphia Federal Reserve, speaks on monetary policy at a Swiss National Bank conference in Zurich.
4:30 ― Fed Chairman Ben Bernanke speaks at Princeton University. His talk is entitled, “Fixing Economics: Lessons from the Crisis.”
DEBT ISSUANCE
* Fannie Mae, benchmark 5-year [talk T+36]; Barc/Citi/DB
* BCI, roadshow this week; BNP/JPM
* KTZ, deal expected following roadshow; Barc/HSBC/RBS
* Interbank, $400m+ 10-year expected next week; BAML/JPM
* Hyundai Cap Am, benchmark bond expected; Barc/Citi/HSBC/JPM
* BancoEstado, deal possible next week; DB/JPM
* BBVA Continental, $200m Tier 1 30NC10; CS/BBVA