USA: mixed data, Fed remains cautious

USA: mixed data, Fed remains cautious

Durable Goods beat, GDP up; jobless down, PCE ~3%: soft landing more likely. Operational: neutral duration, quality equities.

Manufacturing data: Durable Goods (August)

• Headline strength: new durable goods orders +2.9% m/m to $312.1bn (July -2.7%, revised). Ex-transport +0.4%, ex-defense +1.9%; transportation +7.9% (aerospace-led). Shipments edged down (-0.2%).
• Against consensus: markets expected a decline (~-0.3% / -0.5%). The upside surprise is clear.
• Capex: nondefense capital goods orders +5.1% m/m; a supportive signal for private investment in Q3.
  Take: aerospace rebound boosts the headline, but the positive ex-transport print points to a manufacturing base less weak than feared.

Growth: Q2 GDP (third estimate)

• Upward revision: annualized GDP +3.8% (from 3.3% second estimate). Q1 revised to -0.6%, with import/export dynamics shaped by new tariffs.
  Take: the Q2 “step-up” improves the 2025 trajectory, though BEA notes part of the boost came from trade (softer imports). H2 growth remains less certain.

Labor: Initial Jobless Claims

• Week ended Sep 20: initial claims 218k (-14k w/w), the lowest since mid-July; expectations 235k. Continuing claims 1.926mn.
  Take: the near term looks firmer versus early-month highs, but broader labor gauges still show a market less tight than a year ago.

Inflation: PCE (out tomorrow)

• What markets price: core PCE YoY ~2.9%, with +0.2–0.3% m/m; a touch above the Fed’s target.
  Take: if confirmed, that’s a stabilization in the high-2s, consistent with September’s Fed cut but not enough—alone—to justify an aggressive easing cycle.

Geopolitical/macroeconomic context: why it matters for the Fed

• US tariffs: the step-up (effective average estimated 15–20%) adds volatility to import prices and supply-chain uncertainty; OECD and other studies suggest the full impact is still to come.
• Energy: Brent holds around $68–69/bbl after a pop on lower US inventories and supply risks; Q4 demand looks softer.

Implication for the Fed: the mix of resilient growth (GDP revised up), firm manufacturing (durables better-than-expected) and inflation likely ~3% core keeps the door open to a cautious additional cut in late October, but does not force action absent further cooling in jobs/inflation reports.

Operational summary (not personalized advice)

Base case (4–8 weeks)

• Growth: Q3/Q4 moderate slowdown vs. Q2, no hard landing in today’s data. Soft-ish bias.
• Inflation: core PCE around 2.8–3.0%; risk of sticky services and partial tariff pass-through.
• Fed: data-dependent tone; an extra October cut is possible, not guaranteed.

Tactical ideas consistent with today’s prints

1. Rates

·        Neutral/slightly long duration in 5–10yr Treasuries: growth-OK/claims improving but core PCE ~3% caps extreme rallies in yields; still offers carry and downside protection if data soften.

2. US Equities

·        Quality & cash-generative (large-cap tech, defensive healthcare) as long as margins hold; overweight capex beneficiaries (AI, automation) given the positive signal from nondefense capital goods.

·        Industrials/Aerospace: tactically supported by order rebound; watch cyclicality and tariff sensitivity.

3. Credit

·        Prefer IG over HY: choppy claims and tariff uncertainty argue for disciplined risk.

4. USD & Commodities

·        USD: mixed data and a less-hawkish Fed can trim rate advantage; trade-policy volatility remains high (manage tactically).

·        Energy: oil in the mid-to-high 60s; useful as a tactical hedge but with pullback risk if Q4 demand underwhelms.

5. Hedge tariff risk

·        Review exposures with high import content/complex global chains; favor firms with pricing power and diversified domestic production.

In short
Today’s package nudges the needle toward a soft—though not guaranteed—landing: GDP beat, manufacturing upside surprise, no labor crack, and inflation likely near 3% core. The Fed can stay patient and data-dependent. Operationally, maintain defensive-but-not-recessionary balance: moderate duration, quality equities tied to capex, IG credit, selective hedges on energy and tariff risk.