What did June's durable goods report show?
New orders for durable goods rose 0.3% in June to $334.8 billion, recovering from May's 4.0% drop. The number that mattered more sat one line down: core capital goods orders, nondefense goods excluding aircraft, rose 0.9%, beating the roughly 0.8% forecast, after May's initial reading was revised up to 1.9%. That series is the Census Bureau's cleanest monthly read on business investment plans.
Why did core orders outperform the headline number?
Computers and electronic products led, up 3.1% to $31.1 billion, the ninth gain in ten months. Electrical equipment and appliance orders added 0.9%. Core capital goods shipments, which feed directly into GDP, jumped 1.9% after a soft 0.2% in May. Orders excluding transportation rose 0.6%, and core capital goods are now up 9.3% year over year, a sign business investment is holding up even as headline manufacturing data stays choppy.
What is the Fed deciding this week, and how is the market pricing it?
The FOMC announces its rate decision Wednesday, July 29 at 2:00 PM ET, with Chair Kevin Warsh's press conference at 2:30 PM ET. As of Monday's close, CME FedWatch priced roughly a 65.7% chance the Fed holds at 3.50-3.75%, with most of the remaining probability on a quarter-point hike, not a cut. This is a non-SEP meeting, so no updated dot plot accompanies the decision.
Why are September hike odds running so far ahead of July's?
The gap is the real story. Where July is priced as a coin-flip-adjacent hold, CME FedWatch has September hike probability near 80%, split between a 25-basis-point move (about 50.6%) and a 50-basis-point move (about 19.6%). Oil-driven inflation fears built that pricing over the past two weeks. Monday's sharp drop in crude on the US-Iran de-escalation is the first data point that could start unwinding it.
What else is on the calendar this week?
Microsoft and Meta report Wednesday after the close, the same day as the Fed decision. Apple and Amazon follow Thursday, July 30. Consensus sits at $1.89 EPS for Apple and $1.82 EPS for Amazon, both well above year-ago results. The next jobs report is not due until Friday, August 7, at 8:30 AM ET, covering July; a widely published consensus was not yet available. June's print, 57,000 jobs added, was the weakest in four months.
Where do yields and volatility sit heading into FOMC?
The 2-year Treasury yield closed near 4.31% and the 5-year near 4.39% on Monday, both consistent with a market pricing a hold this week and hike risk later in the year. The VIX closed at 18.58 Monday, and the Atlanta Fed's GDPNow model estimate for the quarter stood at 1.7% as of its most recent update.
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