Durable Goods Orders will manifest strength of US economy – effects on bonds, stocks, gold and currency
Peter Oberois
Oct. 24, 2006

A very strong durable goods order waits all of us. The report is due at 8.30 AM on October 26th. In August it came at –0.5%. This month the market expects +2.1%. Excluding the transportation orders, it is expected to be +1.0%.

the analytical models are showing a better report than the market expectation. A +2.5% increase is possible. The strength in durable goods order with increasing leading indicator and confirming stock market tells a positive story for the US economy. The economy may have started a new accelerated expansion path. Of course consumer confidence related to home prices and gasoline prices is very critical.

If history is any indicator, rising durable goods order with increasing leading indicator and confirming stock market forecast a robust economy with inflation pressure in the next six to nine months.

If that is the case it can be negative for bonds. For stocks it is a mixed signal. The growth related rise is behind us. Soon the market will start looking at rates. The gold can slump with rising rates. However if inflation pressures are excessive, gold will also rise. The quantitative models are predicting strong inflationary pressures in the economy with metals and oil rising fast.

China and India are also key factors. If China and India starts slowing down, all bets are off.

Durable Goods Orders will manifest strength of US economy – effects on bonds, stocks, gold and currency
Peter Oberois
If history is any indicator, rising durable goods order with increasing leading indicator and confirming stock market forecast a robust economy with inflation pressure in the next six to nine months.
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