Solid US data is just the thing to soothe Fed worries

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The markets have been pitching a fit since the Federal Reserve raised the prospect of winding down quantitative easing. Some of that is to be expected, but there is concern about how long the turmoil will last. One clue on that is how the markets react to good economic news. This morning, we got a boatload of optimistic economic updates.

Durable goods orders rose on solid aircraft and machinery orders. Also, the closely watched gauge of business spending embedded in the report, nondefense capital goods orders, excluding aircraft showed the third straight month of 1% increases. Here’s a look.


The news on housing was also good. In April, the FHFA home price index—which measures single family homes purchased with conventional mortgages—rose 0.7% over March, another solid gain.


A fresher read on housing prices from May also arrived this morning. The S&P/Case Shiller 20-city house price index rose 12.1% over the prior year, continuing a string of strong gains.


Of course, improvements in the housing market are largely due to historically low mortgage rates stoked by the Fed. The recent selloff in bonds has pushed mortgage rates sharply higher, which is a headwind for housing. Still, overall, today’s data signaled a win for the US economy—and hinted that the extreme market jitters may not last.