US durable goods orders fell 1.4% in December. That was less than the expected 2.0% decline.
This points to a smaller drop than forecast. The report showed -1.4% versus a forecast of -2.0%.
Manufacturing Momentum Into The New Year
The December durable goods report showed a 1.4% decline. That was much better than the -2.0% drop we expected. It suggests manufacturing had more momentum going into the new year than we thought. We view this as a sign the economy remains resilient.
This stronger late-2025 reading, along with the January jobs report showing more than 200,000 new jobs, suggests the economy is holding up well. Core inflation is still a little above 3%, which weakens the case for a near-term Federal Reserve rate cut. As a result, we are adjusting our expectations for policy through the second quarter.
In response, we are considering buying call options on industrial and technology sector ETFs in the coming weeks. Stronger economic data can support better earnings expectations for companies tied to business spending. Options offer defined risk with upside exposure if markets move higher.
We are also reassessing the interest-rate outlook, given how markets reacted to policy changes in 2024 and 2025. This report suggests yields may not fall as quickly as we priced in at the end of last year. Because of that, we are reviewing options on Treasury bond ETFs that could benefit if yields stay steady or rise slightly.
Positioning For Lower Volatility
Steady economic data like this often keeps market volatility low. The VIX has been trading in a lower range and recently sat near 14. Based on this report, we see little reason for a sudden spike. In this setup, selling premium with strategies such as put credit spreads on major indices may be attractive.
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