Implications:  New orders for durable goods plummeted in June at the fastest pace since the COVID shutdowns in early 2020.  However, the 9.3% decline in new orders was almost entirely due to the very volatile category of commercial aircraft, where orders came back down to earth following the massive Boeing order from Qatar Airways during President’s Trump’s tour through Saudi Arabia, Qatar, and the United Arab Emirates. With the full expectation that airline orders would slow (and cancellations increase) as companies and countries navigate the ever-shifting trade and economic environments, ex-transportation orders provide a much better read on the health of activity and those improved in June.  Orders rose across all major categories, led by primary metals (+0.6%), computers & electronic products (+0.6%), machinery (+0.4%), fabricated metal products (+0.2%), and electrical equipment (+0.1%).  We welcome the broad-based gains, but it must be noted that ex-transportation orders – up 2.2% in the past year – are just barely keeping pace with inflation.  The most important number in today’s release, core shipments – a key input for business investment in the calculation of GDP – rose 0.4% in June and were up at a 3.1% annualized rate in Q2 versus the Q1 average.  The environment in Washington – and geopolitical events abroad – remains uncertain, and we expect volatility in the data to be the rule rather than the exception for the foreseeable future.  In turn, the Federal Reserve must navigate what these changes mean for the path of inflation.  While we don’t currently expect any movement from the Fed at the meeting next week, we do believe that cuts are on the table starting in September, as economic moderation brings the employment side of the Fed’s mandate into more central focus.  In other news this morning, the Kansas City Fed Manufacturing Index, a measure of factory sentiment in that region, improved to +1 in July from -2 in June, representing the first reading in positive territory for the index since late 2022. 

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