US Durable Goods Orders Drop 1.4% in December, Signaling Manufacturing Weakness
US durable goods orders fell 1.4% in December 2024, the largest monthly decline since April 2023, according to the Commerce Department. Transportation equipment led the drop with a 4.2% fall—driven mainly by weaker commercial aircraft demand—while motor vehicles and parts declined 0.7%. Excluding transportation, orders still fell 0.5%. Core capital goods (nondefense excluding aircraft) slipped 0.3%, indicating cooling business investment. The decline follows a revised 0.9% increase in November and turns the three-month moving average slightly negative. Manufacturing (about 11% of US GDP) has shown softening elsewhere: the ISM manufacturing PMI was 48.5 in December and regional Fed surveys signaled weakness. Markets reacted with lower Treasury yields, a softer dollar, and mixed equity responses—industrial stocks underperformed. Key drivers cited include higher borrowing costs from past Fed rate hikes, weaker global demand, inventory adjustments after the holiday season, and sector-specific issues such as aircraft production problems. Employment in manufacturing slowed (only 4,000 jobs added in December). Analysts say the data may influence Fed policy deliberations on timing for rate cuts but is unlikely on its own to trigger immediate moves. For traders, the report highlights increased downside risk to cyclical and industrial sectors, possible near-term easing in yields and the dollar, and the potential for policy-driven volatility depending on subsequent economic releases.
Bearish
A 1.4% decline in durable goods orders—with transportation equipment down 4.2% and core capital goods also falling—signals weaker business investment and manufacturing activity. For crypto markets, weaker manufacturing and signs of economic softening typically lead to lower Treasury yields and a softer dollar, which can be mixed for crypto: a weaker dollar can be supportive for risk assets, but increased economic uncertainty often raises risk aversion and reduces speculative flows into higher-volatility assets. Historically, macro slowdowns (e.g., when manufacturing data softened) have produced short-term volatility and often bearish pressure on risk-on assets until clear policy easing or demand stabilization appears. Traders should expect near-term increased volatility: cyclical and industrial correlated tokens or equities could underperform; stablecoins and BTC may see flight-to-quality flows but also liquidity-driven selling. The report also increases the chance of earlier Fed easing in traders’ expectations; if confirmed by subsequent weak data, that could turn bullish for crypto over the medium term as real yields fall. Immediate impact is likely negative-to-neutral (risk-off volatility), with potential medium-term upside if policy shifts to easing and macro indicators stabilize.