The Daily Difference: Market Update January 6, 2014

Factory orders and the ISM Non-Manufacturing Index were released this morning:

  • Factory Orders were up 1.8% vs. the consensus estimate of 1.6%. A further bonus we a 0.4% upward revision to last month’s number (initially -0.9%). The increase was led by a jump in the capital goods sector, possibly indicating increasing business confidence.
  • The ISM Non-Mfg Index disappointed with a reading of 53 vs. the consensus estimate of 54.8. The most troubling component is new orders, the only leading component, which fell to 49.4 from 56.4 the previous month. Despite a positive leading indicator in the Factory Orders report, the leading indicator in the ISM report indicated contraction for the first time since July 2009.

Neither of these numbers are large market movers, and the conflicting leading indicators will likely offset any effect on today’s trading.  The more significant numbers to be released this week include:

  • International Trade: Tuesday
  • Jobless Claims: Thursday
  • Employment Situation: Friday

The most significant release will be at noon on Wednesday: FOMC Minutes. Three weeks after the fact, we will get a good look at the Federal Open Market Committee’s minutes, hopefully providing more transparency into the changing policies regarding the tapering of asset purchases. The minutes release will be preceded by speeches from Eric Rosengren (dovish), Esther George (hawkish….. and the Fed Governor for our region), Narayana Kocherlakota (dovish), Jeffrey Lacker (hawkish), and James Bullard (dovish). Given the significant changes occurring within the Fed (Yellen replacing Bernanke in a matter of weeks), most market observers will likely be looking for continuity in the Fed’s message.

BlogJames O'Brien