Economic Data Deluge
New economic data has come out ahead of regular market trading this Wednesday, with results — much as we saw yesterday — coming in below analysts’ expectations. Consumer Confidence for June was down from May and lower than expectations. New Home Sales for May were lighter than anticipated. And this morning we see:
Durable Goods Orders for May fell lower than consensus, to -1.3% from -1.0% estimated. The April revision was also lowered, from -2.1% originally reported to -2.8% now. Subtracting Transportation and non-Defense orders gives us slightly positive reads, demonstrating we’re seeing a dearth in things like aircraft being sold. (See Boeing’s [BA] difficulties with the 737 MAX, for instance.)
May’s Advance Trade in Goods — always running at a sizable deficit — came in well below expectations: -$74.5 billion compared to the -$70.7 billion estimate and -$72.1 billion reported in April. We’re back to the low ranges we saw in early 2018, but off the all-time -$80 billion lows that came in early this year.
This time last year we were at medium-term lows, nearly $10 billion less overall. In fact, we haven’t seen a monthly trade deficit below $60 billion since October 2016. Watch decision making related to the U.S.-China trade war to see how it affects the U.S. trade deficit over time.
Speaking of the trade war, investors await the first meeting between Presidents Trump and Xi this Saturday during the G-20 summit in Osaka, Japan. This will mark the first time the two leaders will have met in person since trade negotiations fell apart a month ago.
Treasury Secretary Steve Mnuchin remains “hopeful” a deal can be reached. By his estimation, a trade deal was 90% complete at the time of the unravelling — reportedly when China took back several tenets it had previously agreed to. Mnuchin has used this “90%” figure often, and at least for the past 6 weeks or so.
This did not stop market futures from climbing in today’s pre-market, though the triple-digit gains we saw on the Dow have been roughly halved 30 minutes before the opening bell. It will be difficult for those anticipating a major trade agreement soon to hang their hat on anything but an actual news report that a new deal is being signed.
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