Morning Report: Defense spending boosts durable goods orders

Posted on September 27, 2023 by Brent Nyitray

Vital Statistics:

Stocks are higher this morning on stronger-than-expected durable goods orders. Bonds and MBS are flat.

Durable Goods orders rose 0.2% in August based on higher defense spending. If you strip out defense spending, durable goods orders fell 0.7%. July’s numbers were revised downward. Non-defense core capital goods orders (which is a proxy for business capital investment) fell 2.9%.

Minneapolis Fed President Neel Kashkari said that a government shutdown / drawn-out strike with the UAW could act to lower inflation and reduce the need for the Fed to hike further. “If these downside scenarios hit the U.S. economy, we might then have to do less with our monetary policy to bring inflation back down to 2% because the government shutdown or the auto strike may slow the economy for us,” he said in an interview. “I’m not hoping for that, but there’s an interaction there.”

The Senate advanced legislation which could help prevent a government shutdown, however House Speaker Kevin McCarthy is still dealing with members who want increased funding for the border. Another major sticking point is funding for Ukraine.

Generally speaking these government shutdowns are more show than substance. The Park Service will close off some monuments in DC and that will be about it. They usually have little to no economic effect beyond pushing some growth from one quarter to the next.

Mortgage Applications fell 1.3% last week as purchases decreased 2% and refis fell 1%. “Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week. The 30-year fixed mortgage rate increased to 7.41 percent, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34 percent, the highest rate in the history of the jumbo rate series dating back to 2011,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields. Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications. Many homeowners have little incentive to refinance.”

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9 Responses

  3. jnc4p's avatar
    jnc4p, on September 27, 2023 at 1:42 pm said:

    The insult to the intelligence is what gets me:

    “How We Got ‘Democracy Dies in Darkness’

    And other stories from eight years running The Washington Post
    By Martin Baron
    September 26, 2023, 7 AM ET
    …
    Two years earlier—a month into Trump’s presidency—the Post had affixed “Democracy dies in darkness” under its nameplate on the printed newspaper, as well as at the top of its website and on everything it produced. As the newspaper’s owner, Jeff Bezos, envisioned it, this was not a slogan but a “mission statement.” And it was not about Trump, although his allies took it to be.”

    Of course it was about Trump.

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    • Brent Nyitray's avatar
      Brent Nyitray, on September 27, 2023 at 1:44 pm said:

      Of course “democracy” means nothing more than “democrats getting their way”

      Being Liberal means never having to exit the bubble.

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    • Kevin S. Willis's avatar
      Kevin S. Willis, on September 27, 2023 at 11:41 pm said:

      X is being flaky but from what I read the replies had facts and data contextualizing the WaPo thread, with Washington Post’s thread was all emotion and narrative.

      I’m not sure if that was overtly editorial or not but even editorials can fold in facts, and sometimes they do. Or did. There’s no reason not to contextualize the amount of gun crime done by legal gun owners or weapons sold by legal owners. Or provide the number of gun crimes that are committed by people who, like Hunter Biden, don’t legally own their weapon.

      I’m not a gun owner and doubt I ever will be. If I ever buy one I’ll probably get rifles and shotguns for home defense and shooting critters in my yard. But even that’s unlikely at this point.

      I’ve run into a number of open carry folks in my life and most of them have kind of been assholes. This is anecdotal but open carry tends to ostentatious and kind of like walking around in a giant codpiece. You’re at the grocery store, why exactly do you need to have your giant handgun strapped to your hip?

      But I don’t think that guy is going to murder anybody or commit a crime.

      Because statistics say that legal open carry guy is as likely to murder somebody as I am to win the lottery.

      Yet everything the leftist press does is moaning about is how many legalgun owners there are and how easy it was for them to buy guns, despite the fact those people commit a statistical 0% of gun crimes.

      They don’t care about gun crimes. At all. They care about great masses of the peasants being allowed to live lives and make decisions they don’t approve of.

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      • Brent Nyitray's avatar
        Brent Nyitray, on September 28, 2023 at 11:37 am said:

        Everything about the left boils down to control. That is why they detest the concept of armed citizens. It is nothing more deep than that.

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  5. jnc4p's avatar
    jnc4p, on September 28, 2023 at 10:23 am said:

    The Republican debates without Trump have a fantasy football league feel about them. Like they are completely hypothetical thought exercises and irrelevant to what’s actually going to happen.

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