On Tuesday the Commerce Department released new economic data that revealed durable goods rose 3.6 percent in May, surpassing briefing.com estimates of 3.0 percent and showing demand for new goods remain strong, led by strong gains in aircraft.
Durable goods are hard goods that can be used for several years and includes items like refrigerators, trucks, and aircraft.
Aircraft orders in May jumped 51 percent, up from 18.3 percent in April.
Excluding transportation equipment, orders expanded 0.7 percent, beating estimates of -0.6 after expanding 1.7 percent in April.
Shipments of core capital goods which is used for calculating quarterly economic growth and includes software spending, rose 1.7 percent in May and easily beat a 2 percent decline in April.
However, orders for autos and parts fell 1.2 percent after a 2.4 percent rise in April.
Non-defense capital goods orders, excluding aircraft, increased 1.1 percent.
Market Overreaction To Quantitative Easing Exit
Yesterday Dallas Fed President Richard Fischer, known for being a Fed hawk, shared his views about the Fed’s monetary policy, encouraged investors to not overreact to Fed Chairman Ben Bernanke’s comments last week about the possibility of moderating the Fed’s quantitative easing bond purchases as early as 2013 if U.S. economic data improves.
Fischer said during an interview with the Financial Times, “I don’t think anyone can break the Fed . . . But I do believe that big money does organize itself somewhat like feral hogs. If they detect a weakness or a bad scent, they’ll go after it.”
Fischer told the Times, “I don’t want to go from Wild Turkey to ‘cold turkey’ overnight.”
Minneapolis Fed President Narayana Kocherlakota, a non-voting member of the Fed, released a statement where he shared his views about the Fed’s asset purchases.
“The Committee should continue to buy assets at least until the unemployment rate has fallen below 7 percent, as long as the medium-term outlook for the inflation rate remains below 2.5 percent and longer-term inflation expectations remain well anchored” Kocherlakota wrote.