LIVE MARKETS-Data triptych: Consumer confidence, durable goods & Case-Shiller

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DATA TRIPTYCH: CONSUMER CONFIDENCE, DURABLE GOODS & CASE-SHILLER

Investors came sauntering back after three days celebrating the unofficial start of summer to kick off the holiday-shortened week with a mixed trio of economic indicators.

Right off the bat, some good news: the mood of the U.S. consumer, who shoulders about 70% of the U.S. economy, has brightened considerably this month.

The Conference Board's (CB) consumer confidence index USCONC=ECI jumped 14.4% in May to land at 98, or 11 points to the north of consensus.

Digging deeper, survey participants' assessment of present conditions improved by 3.7%, while near-term expectations surged by an impressive 31.4%, bouncing off April's most pessimistic reading since October 2011.

"All three components of the Expectations Index—business conditions, employment prospects, and future income—rose from their April lows," says Stephanie Guichard, CB's senior economist of Global Indicators. "Consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects."

Data geeks will remember that a yawning gap between the present situation and expectations - as seen in the graphic below - is often a harbinger of recession. Any material narrowing of the gulf between the two is welcome:

New orders for long-lasting, U.S.-made goods USGDN=ECI dropped by 6.3% last month, a shallower drop than the 7.8% plunge analysts expected and a reversal of March's downwardly revised 7.6% gain.

As is often the case, it was all about airplanes.

Drilling down into the Commerce Department's report - which covers everything from toaster ovens to attack drones - a 51% increase in commercial aircraft orders was largely responsible for the drop. Remove all transportation-related items, and new orders would have risen by 0.2%. A 30.5% surge in defense-related capital goods helped mitigate the weak headline number. Striking defense items, new orders would have dropped 7.5%.

All in all, the report is a "further indication that underlying investment demand is slowing significantly in the wake of the tariff shock," says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

Perhaps the most disappointing element of the report was in core capital goods, which slid 1.3%. The metric - which excludes aircraft and defense items and is considered a barometer of U.S. corporate capex plans - printed much weaker than the -0.1% consensus.

"The underlying trend in equipment demand is weak amid policy uncertainty and a fading boost from tariff front-loading in certain sectors," writes Barnard Yaros, lead U.S. economist at Oxford Economics. "We will still maintain depressed levels of equipment investment over the second half of the year, given the signal from core capital-goods orders."

"Policy uncertainty and the sticker shock from tariffs will start to bite more forcefully as well," Yaros adds.

Switching to housing, home prices across major U.S. cities surprised economists by edging 0.1% lower in March, according to the Case-Shiller 20-city composite USSHPQ=ECI.

Analyst estimates called for a 0.3% monthly decrease.

Year-over-year, the 20-city composite posted a 4.1% gain, cooler than February's 4.5% reading, which analysts expected to be repeated in today's report.

"Limited supply and steady demand" continued to support home price growth, "despite affordability challenges remaining firmly in place," says Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones.

"Affordability remained severely constrained," Godec adds. "Mortgage rates hovered in the mid-6% range throughout March, keeping monthly payment burdens near multi-decade highs relative to incomes."

Among the cities in the composite, New York and Chicago once again led the year-over-year gainers, rising 8.0% and 6.5%, respectively. Alas, poor Tampa was once again the sole loser, with home prices down 2.2% compared with a year ago.

(Stephen Culp)

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