Synopsis:

Morgan Stanley expects a sharp 8.7% MoM decline in April durable goods orders, led by a drop in aircraft orders and softness in core components. However, consumer confidence may show a modest recovery after easing trade tensions and higher equity prices.

Key Points:

• Durable Goods (April):

  • Headline orders seen falling 8.7% MoM, mainly due to a large decline in aircraft orders.

  • Core capital goods orders (non-defense ex-air) forecast to dip 0.2% MoM, showing underlying weakness in business investment.

  • Shipments of core capital goods expected to rise just 0.1% MoM, reflecting only marginal strength.

• Consumer Confidence (May):

  • The Conference Board index hit new cycle lows in April, but Morgan Stanley expects a slight rebound.

  • Improvement likely driven by:

    • Relaxation of some US-China tariffs

    • Stock market gains, which typically support sentiment.

  • The rebound is expected to center on expectations, as current conditions remain steady.

Conclusion:

The data will underscore fragility in US business investment, while consumer sentiment may begin stabilizing. A weak durable goods report could reinforce market expectations for a Fed rate cut later this year, while any rebound in confidence will be watched for depth and durability.