Last week the FED left the interest rates unchanged as widely expected, but they made a strong case for a rate hike. The odds are that it will come in the December meeting because the next meeting is scheduled about a week prior to the US presidential elections.  

So, a December rate hike is almost a done deal, but there is always that odd possibility that everything falls apart until December which might scare the FED away. After all, they did emphasize that the economic data must remain positive so they don´t change their opinion.

The US goods orders which were published more than an hour ago surely weren´t evocative for the FED. They weren´t that bad, but they weren´t good either. 

– The durable goods orders for September beat the expectations which were for a 1% decline, but they came out flat which is not a good sign. (Neutral)

– The core durable goods orders came out as expected at -0.4%. (Dovish)

– The orders excluding the defense sector declined by 1%. This means that the orders in the private sector fell in September. It´s only the defense spending which gives the false impression that the goods orders are still afloat. (Dovish)

– The orders excluding defense and aircraft parts and vehicles increased by 0.6%. The bad news here is that the aircraft orders have declined so much in September that it distorts the orders for the entire economy by 1.6%. How much did the aircraft orders fell in September, 60%? The good news is that the orders for the rest of the US economy grew in September. Since the aircraft orders are volatile this component is positive. (Hawkish)

– All of last month´s data was revised lower. (Dovish) 

As you can see, we have one neutral, one hawkish and three dovish figures here. The scale clearly weights on the dovish side, which is not what the FED wants. They are not basing their next rate hike decision solely on this data, but that´s a piece of the US economy and it doesn´t look good. By the way, the FED members have already started yelling their guts out, so we´ll see if they have anything to say about this latest release.