Nobody could have predicted that today's April Durable Goods [2]number (and key component of where Q2 GDP is headed) just over two weeks from the FOMC's June 20 meeting, will be a slaughter. NOBODY. Printing at -0.6%, the number was a huge miss to expectations of a 0.2% rise, and is the 3rd drop in the last 4 months. The previous number was also revised lower from -1.5% to 2.1% so at least it rose. Still, this was miss number 5 out of the past 7 reports. Excluding transportation, new orders plunged 1.1%, after falling another 0.7% in march.. The main reason for the headline collapse: a 21.5% plunge in defense orders. As Bloomberg's Rich Yamarone said, "Crummy" start for 2Q investment component of GDP report as shipments of nondfense capital goods ex-aircraft fell 1.5%. Expect Q2 GDP forecast cuts from Goldman et al within minutes: we expect Hatzius to trim his 2.1% Q2 GDP estimate to about 1.8%.
The red bars below show the miss to expectations. Via BBG.
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