Durable Goods Drop 9.3% In June As Transportation Falls 22%; Core Orders Edge Up 0.2%

Economic

Summary:

Durable goods orders fell 9.3% in June, led by a 22.4% drop in transportation. Core orders rose 0.2%, signaling fragile U.S. manufacturing momentum.

Durable Goods Orders Plunge in June as Transportation Sector Contracts Sharply.

U.S. durable goods orders fell sharply in June, down 9.3% month-over-month to $311.8 billion, reversing much of May’s 16.5% gain. The U.S. Census Bureau reported the drop was largely due to a steep decline in transportation equipment orders, which sank 22.4% to $113.0 billion. Traders are assessing whether this signals a broader cooling in manufacturing or a sector-specific retreat.

Transportation Slump Drags Overall Durable Goods Lower

The 9.3% drop in total durable goods orders was driven almost entirely by transportation, especially aircraft orders. Transportation equipment orders fell $32.6 billion in June, reflecting ongoing volatility in the sector. Excluding transportation, durable goods orders actually rose by 0.2%, slightly above the 0.1% forecast. This narrow gain offers limited relief, suggesting underlying manufacturing demand remains soft but stable outside transportation.

Core Orders Surprise to the Upside, But Trend Remains Weak

Core durable goods orders—excluding transportation—posted a modest 0.2% gain, matching a downwardly revised 0.6% rise in May. Although slightly above expectations, the result reinforces a view that core manufacturing growth is tepid. Meanwhile, orders excluding defense spending fell 9.4%, pointing to waning demand from the private sector. These trends highlight cautious capital expenditure from businesses in a climate of elevated interest rates and tighter financial conditions.

Market Reactions and Rate Expectations in Focus

The softer headline figure has not significantly altered rate expectations. With inflation readings showing signs of stabilization, the Federal Reserve is expected to maintain its current policy stance. However, continued weakness in durable goods orders—particularly in transportation—could start influencing forward guidance, especially if business investment falters further. Bond yields were little changed following the report, while the dollar held steady, reflecting market consensus that the Fed will stay on hold for now.

Outlook: Bearish Near-Term Tone for Manufacturing Sector

The sharp drop in durable goods orders in June, especially in transportation, points to a bearish short-term outlook for the manufacturing sector. While core orders showed modest growth, the broader trend remains fragile. Unless transportation rebounds and private-sector demand strengthens, traders should anticipate further pressure on industrial stocks and manufacturing-related assets in the near term.

Source: FX Empire

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Damon

Economic

It’s been a mediocre week for UK economic data.

House price data at the start of the week pointed to a flat market, with reasonable activity but no great conviction. The public finances turned out to be in worse shape than expected. Yesterday’s snapshots of economic activity from S&P Global pointed to a weaker-than-hoped services sector, with talk of job cuts and falling new orders.

Now, this morning, we’ve seen a tepid reading for consumer confidence, plus retail sales data which — you guessed it — missed expectations.

So what’s the damage?

The most eye-catching point from the consumer confidence survey was that UK households feel like (and do remember, this is about stated “feels” rather than actions) saving more now than at any point since November 2007. As you’ll recall, that was in the run-up to the financial crisis and not long after Northern Rock had tested the British love of queuing to its limit.

That is strikingly downbeat. Saving money is no bad thing. But cautionary saving points to wider problems with the economy — people refrain from spending because they’re worried — and we’re spoiled for choice on those.

Inflation remains pretty high and shows no real sign of retreating. Wages might have gone up on average in “real” (after inflation) terms but not everyone has enjoyed an inflation-matching pay rise this year, with better-paid sectors tending to see the lowest increases in recent months.

So it’s possible that the better off are aware of the pinch and are keen to save more. People might also be worrying about their job security. It’s not at all clear what’s going on with the UK labour market right now, but we can fairly assume that it’s not booming.

Or it might be that they’re worried about taxes going up in autumn, given the state of the public finances, and so they’re saving as a precaution. Whatever the reason, the issue here is that the UK is a consumer economy. As I said, saving is no bad thing, but if spending is weak then that isn’t great for business sentiment — or employment — either.

The Glass Half-Full Option

On the other hand, we don’t want to get too downbeat. As Rob Wood, chief UK economist at Pantheon Macroeconomics points out, the official retail sales figures have been distorted somewhat by the timing of Easter this year. Looking at the figures across the year, retail sales have gone up by about 0.3% a month, “a healthy clip.”

The consumer confidence figure, says Wood, should be taken with a pinch of salt. Savings intentions alone don’t necessarily correlate with actual savings balances — in other words, what people say and what they do are two different things.

Looking at company results also points to people acting in a less cautious manner than they’re necessarily letting on. The hot weather helps of course, but pubs have been reporting very solid results so far this year, with JD Wetherspoon, Marston’s, and this morning, Mitchells & Butler’s, all doing decent business.

At the end of the day, you can’t spend money you don’t have. And so far, it seems that people do have money to spend, even if they don’t feel that cheerful about what’s going on in the wider world.

Will it last? Clearly that depends on what happens with the jobs market. That may in turn depend on how many more political mini-crises we end up having between now and the end of the year.

There is a lot of pressure on the government, and while there are hints that a wealth tax is not the way that UK chancellor Rachel Reeves is inclined to go — as much for practical reasons as anything else — she has also talked up the need to obey the fiscal rules, and that almost certainly means tax increases.

The lack of predictability, as much as anything else, will continue to hang over consumers and businesses until the direction of travel is clearer.

But on the bright side, the mediocre data should make life easy for the Bank of England next month. A quarter-point interest rate cut is widely expected — even if there’s a chance it could be the last we’ll see this year.

And as I pointed out in yesterday’s piece, in relative terms, the UK does still have some advantages. Not least that we’re hardly the only economy suffering from uncomfortable levels of uncertainty. Sometimes muddling through until things get better is all you need to do. Let’s hope we can manage that.

Looking at wider markets — the FTSE 100 is down 0.3% at around 9,110. The FTSE 250 is down 0.4% at 22,060. The 10-year gilt yield is sitting at 4.64%, higher on the day, as are yields on its German (2.73%) and French (3.40%) peers.

Gold is down 0.7% at $3,340 an ounce, and oil (Brent crude) is up about 0.2% to $69.30 a barrel. Bitcoin is down 2.0% at $116,420 per coin, while Ethereum is down 0.5% at $3,720. The pound is down 0.4% against the US dollar at $1.345, and down 0.2% against the euro at €1.147.

Source: Bloomberg Europe

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Manuel

Political

A federal judge in Massachusetts ruled on Friday that a nationwide injunction he issued in February that blocked President Donald Trump's executive order limiting birthright citizenship should remain in place.

In a written ruling, U.S. District Judge Leo Sorokin in Boston said his earlier nationwide injunction was the only way to provide complete relief to a coalition of Democratic-led states that brought the lawsuit before him, rejecting the Trump administration's argument that a narrower ruling was warranted because of a June decision from the U.S. Supreme Court.

Sorokin wrote that the evidence before him "does not support a finding that any narrower option would feasibly and adequately protect the plaintiffs from the injuries they have shown they are likely to suffer if the unlawful policy announced in the Executive Order takes effect during the pendency of this lawsuit."

White House spokeswoman Abigail Jackson said in a statement that "courts are misinterpreting the purpose and the text" of the U.S. Constitution's 14th Amendment.

"We look forward to being vindicated on appeal," Jackson said.

New Jersey Attorney General Matthew J. Platkin, a Democrat, said in a statement that the states were thrilled with the decision.

"American-born babies are American, just as they have been at every other time in our nation’s history. The president cannot change that legal rule with the stroke of a pen.”

The Supreme Court's June 27 ruling in litigation over Trump's birthright citizenship order limited the ability of judges to issue so-called "universal" injunctions -- in which a single district court judge can block enforcement of a federal policy across the country -- and directed lower courts that had blocked the Republican president's policy nationally to reconsider the scope of their orders.

But the ruling contained exceptions allowing courts to potentially still block it across the country again.

That has already allowed a judge in New Hampshire to once again halt Trump's order from taking effect by issuing an injunction in a nationwide class action of children who would be denied citizenship under the policy.

A federal appeals court in California on Wednesday said Trump's executive order violated the citizenship clause of the U.S. Constitution's 14th Amendment by denying citizenship to many persons born in the U.S., and blocked its enforcement nationwide.

Trump signed the executive order on January 20, his first day back in office, as part of his crackdown on immigration.

The executive order directed federal agencies to refuse to recognize the citizenship of U.S.-born children who do not have at least one parent who is an American citizen or lawful permanent resident, also known as a "green card" holder.

It was swiftly challenged in court by Democratic attorneys general from 22 states and immigrant rights advocates who argued it was unconstitutional.

Last week, the states had argued at a hearing before Sorokin that a nationwide injunction was essential. They said restricting birthright citizenship in some states but not others would make it difficult to administer federal benefits programs like Medicaid. A patchwork approach would also lead to confusion among immigrant parents and a surge of people moving to states where Trump's executive order is on hold, straining resources, they argued.

The Justice Department had countered that the states, by continuing to advocate for universal relief, had failed to come to grips with the Supreme Court's decision.

Source: Reuters

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Manuel

Political

A federal appeals court on Friday struck down 2023 regulations adopted by the U.S. Securities and Exchange Commission on funding a comprehensive market surveillance system, finding that Wall Street's top regulator had not provided a sufficient basis for allowing stock exchanges to pass on its costs to their members, court papers showed.

The unanimous decision represented another blow to SEC regulations adopted under the previous Biden administration, which faced concerted opposition from industry and Republican lawmakers. It was also a setback for the Consolidated Audit Trail, a repository of investor and transaction data meant to give regulators overarching visibility into U.S. market operations, but which has faced delays and obstacles for more than a decade.

The American Securities Association and Citadel Securities, which brought the lawsuit, both hailed the outcome.

The ruling "prevents a tax hike on every American investor who buys or sells a share of stock," ASA President Chris Iacovella said in a statement.

The SEC did not immediately respond to requests for comment.

Over the objections of its Republican members, the SEC in 2023 split the operating costs among buyers, sellers, and exchanges. Officials said at the time this would divide costs evenly but also allow exchanges several years to recoup hundreds of millions already spent.

This drew stiff objections from the investment industry, which said it could be left paying an unfairly large share. The two Republicans are now part of the five-member commission's controlling majority.

In an opinion for a three-judge panel of the U.S. Court of Appeals for 11th Circuit, Circuit Judge Andrew Brasher said that, because the SEC had not advanced a sufficient justification in deciding how the system's cost would fall on different actors in the marketplace, "we conclude that the 2023 Funding Order is arbitrary and capricious" and therefore in violation of federal laws governing the crafting of regulations.

The appeals court sent the rule back to the SEC for further processing in line with the court's decision.

The SEC mandated the CAT's creation in 2012 as a response to the "flash crash" of 2010 when major Wall Street indexes temporarily erased nearly $1 trillion in market value in a matter of minutes. Officials say it can allow regulators to spot market manipulation and have cited its data in enforcement actions.

Source: Reuters

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Manuel

Political

Economic

European Commission President Ursula von der Leyen said she will travel to Scotland this weekend to meet with US President Donald Trump, as the two sides aim to conclude a trade deal ahead of an Aug. 1 deadline when 30% tariffs on the bloc’s exports are otherwise due to kick in.

After months of talks and shuttle diplomacy between Brussels and Washington DC, the two sides have been zeroing in on an agreement this past week that would see the EU face 15% tariffs on most of its trade. Limited exemptions are expected for aviation, some medical devices and generic medicines, several spirits, and a specific set of manufacturing equipment that the US needs, Bloomberg previously reported.

Steel and aluminum imports would likely benefit from a quota under the arrangements under discussion but above that threshold they would face a higher tariff of 50%.

“We’ll see if we make a deal,” Trump said as he arrived in Scotland on Friday. “Ursula will be here, highly respected woman. So we look forward to that.”

Trump reiterated that he believed there was “a 50-50 chance” of a deal with the EU, saying there were sticking points on “maybe 20 different things” that he did not want to detail publicly.

“That would be actually the biggest deal of them all if we make it,” the president said.

Trump gave similar odds of an agreement with European negotiators in Washington before leaving, but also said the EU had a “pretty good chance” of reaching an agreement.

Trump announced tariffs on almost all US trading partners in April, declaring his intent to bring back domestic manufacturing, to pay for a massive tax-cut extension and to stop the rest of the world from taking advantage of the US. He has also sought to remove what he describes as barriers for American companies to do business around the world.

Alongside a universal levy, the US president has hit cars and auto parts with a 25% levy, and steel and aluminum with double that. He’s also threatened to target pharmaceuticals and semiconductors with new duties as early as next month, and recently announced a 50% tariff on copper.

The EU has been seeking quotas and a ceiling on future sectoral tariffs that the US has yet to implement but it’s unclear if an initial agreement will shield the bloc from potential future levies at this stage.

The agreement would also cover non-tariff barriers, cooperation on economic security matters and strategic purchases by the EU in sectors such as energy and artificial intelligence.

The terms of any initial deal, which is expected to take the form of a short joint statement, would need to be approved by member states, according to people familiar with the matter. The statement is seen as a stepping stone toward more detailed negotiations.

Because of the ongoing uncertainty, the EU has in parallel put together countermeasures in the event of a no-deal scenario, which would see it quickly hit American exports with up to 30% tariffs on some €100 billion ($117 billion) worth of goods — including Boeing Co. aircraft, US-made cars and bourbon whiskey — in the event of no-deal and if Trump carries through with his threat to impose that rate on most of the bloc’s exports after Aug. 1 or in future. The package also includes some export restrictions on scrap metals.

In a no-deal scenario, the bloc is also prepared to move forward with its anti-coercion instrument, a potent trade tool that would eventually allow it to also target other areas such as market access, services and restrictions on public contracts, provided that there is a majority of member states backing its use.

While Trump didn’t explicitly link negotiations to non-trade matters on Friday, he did suggest that he planned to raise concerns over migration flows. Trump has imposed strict anti-immigration policies since returning to office, carrying out a mass deportation effort of those in the US illegally while also reducing pathways to legally move to the US.

“You got to stop this horrible invasion that’s happening to Europe, many countries in Europe,” Trump said, adding that he believed “this immigration is killing Europe.”

Source: Bloomberg

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Manuel

Commodity

Political

Chemical products companies in Brazil, which exported $2.4 billion to the U.S. last year, face a slew of contract cancellations as President Donald Trump has threatened a new 50% tariff on the South American nation's exports from August 1.

Since Trump's announcement, export orders have been canceled for certain resins and compounds used to make fertilizers, which Brazil supplies to the U.S. agriculture sector, Andre Cordeiro, head of Brazilian chemical lobby Abiquim, said on Friday.

"Fundamentally, these decisions are being made because the bet is that he will actually apply the tariff," Cordeiro said.

One company in Brazil had all its contracts for exports to the U.S. canceled, Cordeiro said, adding that other businesses have seen some of their contracts canceled. There are also cases where sellers had secured export financing for the order, which was later revoked.

He declined to name the affected exporters.

Losses associated with the tariffs go beyond direct exports, as almost every industry uses chemicals in manufacturing processes, from oil to steel, from machinery to production of agricultural commodities, he said.

"No one produces coffee, even grains, without some kind of chemical product in the process."

Cordeiro added that chemical companies are losing export business and also local sales to clients that export goods into the U.S. market.

Brazilian plywood exporters, for example, use chemicals for bonding and themselves have faced U.S. order cancellations, he said. Orange juice makers, which sent 42% of their exports to the U.S. last year, also use chemical preservatives.

Brazilian companies like Braskem have operations in the U.S. and could be affected.

Dow Chemical (DOW), which has 10 plants in Brazil and sizeable exports of silicon metal for processing in the U.S., is also at risk.

Braskem and Dow did not immediately comment.

Exxon Mobil (XOM), which declined to comment, operates in Brazil and serves clients in various industries.

Tariffs are unjustified because Brazil's chemical sector runs a $7.9 billion trade deficit with the U.S., Abiquim said.

Source: Reuters

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Adam

Forex

President Trump’s return to the White House has certainly paved the way for an eventful first half of 2025. Now, as the long-awaited August 1 deadline for reciprocal tariff deals between the US and its trading partners approaches, the dollar is once again heading into uncharted territory.

Much of the market uncertainty that’s been prompted by the president’s bold stance on tariffs has played out in real-time in the USD/EUR spot rate, which has been steadily losing strength since Trump’s inauguration in January.

Uncertainty has been a key theme for the dollar in 2025, and the unpredictability of the president’s stance on trade is about to reach new levels as his deadline for nations to agree to a trade deal with the United States is due to expire in the coming days.

While it’s likely that a number of deals will be confirmed prior to the August 1 deadline, President Trump has suggested that top trading partners like Canada, Mexico, and the European Union could soon face tariffs as high as 50%.

Trump has suggested that reciprocal tariffs on US trading partners are likely to range from 15% to 50%, with higher rates reserved for nations that are deemed to have made the negotiations process more challenging.

Should sweeping levies be put into effect, the cost of importing goods across countless industries could lead to price hikes for a number of everyday products and the possibility of confounding inflation rates returning in the United States.

But what does it mean for the strength of the dollar when faced with the euro and other trading pairs?

The Uneven Impact of Trade Uncertainty

Positive news emerging from the United States surrounding a trade deal with Japan and high expectations of a deal soon to be made with the European Union saw USD/EUR break out of a two-week low amid a sharp decline in the days prior.

But will the imposition of high tariffs on trading partners strengthen or weaken the US dollar? The answer appears to depend on which impacts on higher import costs take hold the most.

Strategists at Goldman Sachs suggested that trade uncertainty would carry a heavier burden on foreign countries than the US, but have since acknowledged that soft data in the United States has weighed in at odds with resilience in European sentiment.

As well as tariff policy uncertainty, federal spending cuts and concerns over a weakening labor market have also contributed to a shaky economic outlook for the US that’s entered the USD/EUR mix.

There have also been suggestions that a weaker US dollar could see more challenges among BRICS currencies to attempt to accelerate de-dollarization.

Despite this, the dollar still dominates the forex landscape, and while China’s renminbi is reportedly used in 50% of all intra-BRICS trade, it still accounted for just 2% of global transactions in May 2025, according to Swift data.

According to the Centre for Economic Policy Research (CEPR), Europe may be forced to deal with a ‘dollar revaluation scenario’ in which USD experiences a prolonged period of weakness as opposed to the initial expectation of appreciation in response to tariffs.

This could occur because of the frequency with which global investors have increased their bond holdings, which has contributed to a strong dollar in recent years. If this process were to reverse as the appeal of US Treasuries weakens, CEPR estimates that the dollar may face fresh doubts over its safe-haven status.

What’s Next for USD/EUR?

It’s unlikely that the European Union will face exceptionally high tariffs as a result of its negotiations with the United States, and a softer trade deal will likely help the case for USD/EUR appreciation.

But adopting a more long-term outlook, many challenges could see currency appreciation fail to materialize for the dollar.

The prospect of uneven tariff deals means that import activities can shift between countries that are facing lower tariffs, or nearshoring businesses look to take advantage of neighbors close to the US to make the most of softer trade levies.

The coffee trade, for instance, is expected to lean more towards Colombia, Brazil, or Indonesia based on the outcome of different tariff rates, and this price-conscious selection process is expected to ring true for many trading partners.

There’s also the danger of foreign retaliation for the dollar to contend with, which could eat into the economic advantages of higher tariff rates on US imports.

The inflationary impact of tariffs may have the final say on the long-term outlook for USD/EUR. Should the August 1 deadline on negotiations lead to increased consumer costs, the higher cost of goods and weaker competition could lead to a rate of inflation that weakens the dollar as a whole, regardless of the outcome of US and EU trade negotiations.

Preparing for Uncertainty

President Donald Trump has long identified tariffs as a leading revenue stream for the United States, and after August, we’ll gain a more holistic view of what the outlook for trade means for the nation’s economy.

For now, the emphasis for forex traders remains focused on the rolling news surrounding US trade deals and their impact on trading pairs. For USD/EUR, a deal between the two partners appears close, but it’s far from the end of trading volatility as that all-important August 1 deadline approaches.