US: Lutnick Talks On Tariffs Amid Autos Reprieve

• Update, over +30,000 SFRM5 95.81/95.93/96.00 broken call flys, 3.25 last ref 95.855
• +15,000 SFRZ5 97.00 0QZ5 97.50 call spds 3.5 steepener
• -20,000 0QH5 96.37 calss, 4.5 ref 96.08/0.22%

Factory orders were slightly disappointing in December, contracting by 0.9% M/M (0.1pp more than expected), with November's revised down 0.4pp to -0.8%. The ex-transport orders figure was better however, showing growth of 0.3% vs 0.2% in Nov. The durable and capital goods components of the report were little changed from the advance release (overall durables orders -2.2% unch, ex-transport 0.3% unch, core cap goods orders up 0.4% vs 0.5% advance / core cap goods shipments up 0.5% vs 0.6% advance). 

• While this was a 4th contraction in 5 months for factory orders, with momentum appearing to slip again (3M/3M SAAR at -3.1%, weakest since March 2024) and the level of orders below mid-2023 levels, overall we continue to see green shoots for manufacturing. That's evident in the ex-transport orders figure which remains heavily influenced by volatile components such as aircraft (-45.7% M/M, which looks largely due to poor Boeing net orders).
• It's also evident in the durable goods orders, even if the downward revisions show slightly less momentum than previously thought. Core capital goods rising 3.3% 3M/3M SAAR (3.8% pre-revision) with shipments up 2.4% (3.0% pre-revision) and both categories rising Y/Y suggests improving dynamics.
• Survey data, including this week's expansionary ISM for January (with strong New Orders), continue to point to a stabilizing manufacturing sector going into 2025, and the durable goods orders/shipments provide some of the initial "hard" data pointing in a similar direction.
• Of course there are countervailing risks, including on tariffs (which may actually have helped boost factory numbers in late 2025 amid front-running), but overall the data bode well for business capex going into 2025 amid signs the broader economy could be regaining some momentum. 

• An initial gain for Bund on the US headline misses, but overall a mixed set of Data, Bund gained 10 ticks, but back down blow the 133.00 figure.
• Technicals are unchanged, support is still at 131.34 (Monday's gap), and resistance comes at 133.58.