Jump in U.S. Durable Goods May Raise Outlook for Q1 GDP

The U.S. Commerce Department reported on Friday that new orders for key U.S.-made capital goods recovered more than expected in February after two straight monthly declines. The news could mean that economists would raise their economic growth estimates for the first three months of the year. They were cut last week after weaker-than-expected retail sales fell in February for the third month in a row.

Orders for non-defense capital goods excluding aircraft jumped 1.8 percent last month. That was the biggest gain in five months and followed a downwardly revised 0.4 percent decrease in January. Economists were looking for a rise of only 0.8 percent in February after a previously reported 0.3 percent decline in January. Core capital goods orders increased 7.4 percent on a year-on-year basis.

In other news, sales of new U.S. single-family homes unexpectedly fell for a third straight month in February. Steep declines in the Midwest and West were blamed for the decline.

The Commerce Department said on Friday new home sales dropped 0.6 percent to a seasonally-adjusted annual rate of 618,000 units last month. January’s sales pace was revised up to 622,000 units from the previously reported 593,000 units. Economists had forecast that new home sales, which account for 10 percent of housing market sales, would rise 4.4 percent to a pace of 623,000 units last month.

U.S. Equity Markets

The major U.S. stock indexes added to steep weekly losses on Friday, as investors continued to assess the damage a trade war between the U.S. and China could have on the economy. In the cash market, the Dow Jones Industrial Average, led by a steep drop in DowDuPont, hit its lowest level since November. Financial stocks dropped 3 percent, helping to pull the S&P 500 Index down 2.1 percent. The NASDAQ Composite also declined.

U.S. Treasury Markets

The yield on the 10-year U.S. Treasury Note finished lower on Friday after posting its biggest drop in six months the previous session. Investors moving money out of equities and into the safe haven Treasurys were the catalysts behind the drop in yields.

Gold

Falling Treasury yields helped weaken the U.S. Dollar, making gold a more attractive asset. This helped push gold up to a one-month high. With risk aversion the name of the game, gold has once again become a popular safe haven asset.

Crude Oil

Crude oil jumped to its highest level since late January after the Saudi energy minister said OPEC would need to keep coordinating supply cuts with non-member countries including Russia into 2019. Additionally, the weekly rig count rose by 4 to 804 in total, up 152 rigs from a year ago, Baker Hughes reported.