US DATA: Dallas Weekly Economic Indicator Tracking 3-4% Q/Q Growth In Q3

StatCan estimates that both manufacturing and wholesale trade sales increased strongly in July, portending a continued recovery from a weak Q2.

• The manufacturing flash estimate is for 1.8% M/M growth, with the transportation equipment and petroleum/coal subsectors expanding the most.
• Manufacturing sales rose by 0.3% in June, for the first rise since January - a 1.8% July increase would be the best in 17 months, and raise the 3M/3M annualized rate to -11.7% from -18.0% (which followed outsized gains in Q1 that were partly tariff-front running related).
• For wholesale trade, StatCan estimates a 1.3% rise (ex-petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain), in large part reflecting gains in motor vehicle/motor vehicle parts and accessories sales.
• This wholesale category rose 0.7% M/M in June, the first rise since February. A 1.3% rise in July would help boost the 3M/3M annualized growth rate to -2.5% from -6.6% in June (again, reflecting giveback from a jump in Q2).
• We get the full reports and data on September 15, but the July data suggests that after a very negative quarter for both manufacturing / wholesale sales, there has been a nascent recovery. 

The Atlanta Fed's GDPNow estimate of Q3 growth was a little weaker Tuesday at 2.18% Q/Q SAAR, vs 2.26% in the last full update on Aug 19.

• There were two countervailing factors that ultimately offset each other in producing the latest estimate.
• Equipment investment is now seen rising 4.8% after stronger-than-expected core durable goods orders data for July, compared with the 3.7% estimate prior (and 4.8% in Q2).
• But residential investment is seen pulling back even more than previously foreseen, at -8.2% (-5.9% in Aug 19 est, and -4.6% in Q2) after a slew of housing data (starts/permits/home sales).
• The next update is on Friday after multiple key data points including advance trade data and PCE.

• Treasuries look to finish mixed Tuesday, curves twisting steeper (2s10s +2.75 at 57.695; 5s30s +6.248 at 116.532) with 2s-10s near late session highs vs. weaker Bonds.
• Markets continued to digest Trump's unprecedented "firing" of Fed Gov Cook late Monday, projected rate cuts rising as Trump works toward a majority on the Fed Board in the near term. The Fed responded that Fed Govs can only be removed "for cause" while Cook moves to challenge the decision in court.
• The dollar dips slightly as President Trump appears to suggest in a cabinet meeting press conference that the administration could nominate Stephen Miran to "fired" Governor Cook's Board position (expiring in 2038), instead of ex-Gov Kugler's vacant spot (whose term ends in January before requiring renewal).
• Treasury futures had pared gains briefly after higher than expected Durable/Cap Goods Orders, Philadelphia Fed Non-Mfg Activity declines. Headline durable goods orders bested expectations at -2.8% M/M (-3.8% expected, -9.4% prior), weighed down once again by the extremely volatile nondefense aircraft orders category (-33% M/M, after -53% prior).
• Meanwhile, core shipments continued to hum along, rising by a 27-month high 0.7% M/M (0.2% expected, 0.4% prior rev from 0.3%).
• Heavy futures volumes (Sep'25 5s &10s near 3.5-4M) tied to Sep-Dec rolling ahead of Friday's "first notice" when Dec'25 will take the lead quarterly position. Light data ahead on Wednesday with MBA Mortgage Applications.