26 January 2012 at 10:36 GMT
The earnings season continues unabated today with Hennes & Mauritz (beating expectations slightly), Caterpillar and Nokia, among many others. On the economic side we have Durable Goods Orders from the US for December, which could see many analysts change their 4Q GDP forecast ahead of tomorrow's report. Lately, Italy wil attempt to auction off EUR 5 billion in 2-year bonds.
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Durable Goods Orders to rise into year end? The Durable Goods Orders report is the final piece of data released before tomorrow's 4Q'11 GDP report, which can have an impact on the latter. Consensus expects another solid rise in orders in December of 2 percent, driven mainly by transportation (Ex Trans. expected to rise 0.9 percent). This comes on the back of an increase of 3.7 percent in November driven almost exclusively by transportation (Ex. Trans +0.3 percent). While most focus on the forward-looking Durable Goods Orders numbers in today's report, it does also contain numbers on Capital Goods Shipments, which is more interesting relative to GDP. This series (excluding defense ex aircraft shipments) has actually
declined 0.66 percent in the first two months of Q4 compared to +1 percent for Durable Goods Orders. Expectations for tomorrow's GDP report continue to hover around 3 percent (annualised), which would mean a third straight quarterly acceleration in the US economy.
Other economic reports: Together with the Durable Goods Orders report we get both jobless claims as always and the Chicago Fed National Activity Index, which is a composite index based on 85 underlying series and serves as a good coincident indicator of economic activity. At 15:00 GMT we get New Home Sales set to rise 1.9 percent to 321,000 according to consensus. The NAHB Housing Market Index has improved markedly in recent months and hopefully this will translate into more housing activity in the coming months. This could be an upside risk to our 2 percent GDP forecast for 2012.