PIPELINE: Corporate Bond Issuance Update: OPEC Fund, CDC Join List

Fed pricing essentially unmoved by the softer-than-expected durable goods data, with markets remaining very much geared towards the inflation and employment outlooks after last week’s hawkish Fed cut.

• Fed funds futures price 38bp of cuts through ’25, with the next 25bp move not fully discounted until June (~13bp priced through the March meeting and ~18bp showing through the May meeting).
• Our macro team highlights strike action as a likely headwind for the headline durable goods prints, with the core readings more upbeat.

Indicators of durable goods activity were mixed in the November preliminary report, with headline figures disappointing amid upward revisions to prior data, and core indices beating expectations.

• On the headline durable goods orders figure of -1.1% M/M, the "miss" vs -0.3% expected was offset by an upward revision to the prior growth reading to 0.8% from 0.3%. Transportation equipment - a typically volatile category - led the decline, falling -2.9% M/M, with nondefense aircraft/parts down 7.0%.
• For perspective, the previous 6 months of % M/M nondefense aircraft orders starting in June were: -126.9%, -663.8%, -19.7%, -16.6%, 16.4%, and  -7.0%.
• While durables ex-transportation orders likewise missed (-0.1% vs +00.3% expected, 0.2% prior unrevised), there were notable gains in core capital goods data for which orders rose 0.7% (0.1% expected, -0.1% prior upward rev 0.1pp) and shipments were up 0.5% (0.2% expected, 0.4% prior also rev up 0.1pp).
• Cutting through the monthly noise, we are beginning to see some more encouraging signs of bottoming out in durable goods, alongside the stabilization in industry surveys (albet at weak levels).
• We note especially the 3M/3M annualized rates of growth in both core orders (2.1%, fastest in 20 months) and shipments (0.7%, the first positive reading for 8 months).
• While various uncertainties lurk for the coming year, including potential tariffs and disruptions to supply chains, the signs for equipment / durables investment are looking slightly brighter in the underlying data as 2024 comes to a close.

• Treasury futures holding modestly weaker levels, off lows after mixed goods data: Durables lower than expected, Cap Goods little higher with modest up-revision to prior.
• The Mar'25 10Y contract trades -5.5 at 108-25.5, still above initial technical support at 108-16.5 (Dec 19 low). 10Y yld +.0261 at 4.5483%.
• Next data: New Home Sales and Consumer Confidence at 1000ET, not to mention spate of Tsy supply that kicks off at 1000ET with $81B 13W & $72B 26W bills.