Massive disappointment and huge revisions the story in durable goods orders

Everyone thought durable goods orders were picking up in August 2014.

They were wrong as 8 consecutive months of contraction began.

Then a month ago it looked like they had finally picked up.

They were wrong again as the number was revised to -0.3% from +1.0%.

Then the Census Bureau made massive revisions to the past year of numbers and we're back to square one.

Here's what we know about durable goods orders

The next release of the report is Tuesday at 8:30 am ET (12:30 GMT). The past year of numbers has been undoubtedly weak.

We focus on core durable goods orders, which are capital goods orders non-defense excluding air. It's what moves the market.

Consensus estimate (green), initial report (white), latest revision (red)

A few things stand out from this report:

  • Economists have been dead wrong on this report over the past year.
  • The latest revisions showed near-5% contractions in Oct and Feb
  • The revisions deviate substantially from initial reports

Perhaps it's better to look at core durable goods in total terms because the monthly changes are so wild.

The US economy is more than 18% larger since the start of 2008 and yet core durable goods orders are flat.

That's a sign of an economy that isn't nearly as robust as portrayed. The divergence has confounded economists and the fall since this time last year would lead to talk about rate cuts at almost any other time. It's a big reason why Yellen was so cautious at last week's FOMC.

What's expected in the upcoming report?

The consensus estaimte is for a 0.5% m/m rise.

Be careful trading it. The misses have been substantial over the past year. The revisions are also a hidden factor.

At the moment, the market is skeptical about the US dollar but it might only take one or two good economic readings to rekindle the US rally. USD/JPY has shown some good signs today.

If the report continues to disappoint, EUR/USD is attractive. It's making yet another run at 1.14 and a bump above 1.1450 would set off a squeeze. The market is obsessed with Greece at the moment but you can argue the biggest mover in EUR/USD at the moment is Fed rate hike expectations so it's not unthinkable this could overshadow any other news Tuesday.