The durable goods orders strategy is a powerful approach for traders looking to capitalise on short-term market movements triggered by economic data. Durable goods data reflects business confidence and consumer demand, making it a vital indicator for understanding economic health and momentum. This article explores how to trade the durable goods report with precision and consistency.

What Are Durable Goods Orders?

Durable goods are items with a life expectancy of three years or more—think vehicles, machinery, and appliances. The US Census Bureau releases the durable goods orders report monthly, usually in the final week of each month. The report includes:

• Headline Durable Goods Orders
• Core Durable Goods Orders (excludes transportation, which is volatile)
• Non-Defense Capital Goods Orders ex-Aircraft (a proxy for business investment)

Movements in these components can offer early clues about GDP growth and corporate investment trends, both of which influence market expectations.

Why Durable Goods Orders Matter to Traders

Durable goods data is closely watched by forex, equity, and bond traders because it provides insight into the future of production and employment.

• A higher-than-expected print typically signals stronger economic activity, increasing the likelihood of tighter monetary policy—bullish for the US dollar and equities.
• A lower-than-expected print can indicate weakening demand and falling confidence—bearish for the dollar and risk assets.

How to Trade Durable Goods Orders: Strategy Framework

A successful durable goods orders strategy hinges on knowing what component to focus on, identifying market expectations, and aligning with technical and sentiment cues.

1. Focus on the Core Data, Not Just the Headline

The headline figure can be distorted by volatile transportation orders. Instead, watch:

• Core Durable Goods Orders (ex-transportation): Reflects broad business and consumer demand.
• Capital Goods Orders (non-defence, ex-aircraft): Acts as a leading indicator of future business investment and GDP.

Strategy Tip:
If the headline beats but the core misses, the reaction can be muted or even reversed. Markets respond to underlying strength, not just flashy top-line numbers.

2. Trade the Surprise Element

Durable goods orders can move markets when the results surprise:

• Positive Surprise (Core beats forecast): Buy USD, buy industrial/consumer discretionary stocks.
• Negative Surprise: Sell USD, rotate into bonds, defensive sectors, or gold.

Example:
If Core Durable Goods print +0.7% vs. +0.2% expected, the US dollar often rallies across the board, especially against low-yield currencies like the yen or euro.

3. Timing and Volatility Management

Durable goods are released at 8:30 AM ET, often alongside other data (e.g. GDP or jobless claims). Always check the economic calendar to avoid overlapping volatility.

Best Practice:

• Pre-positioning: Risky unless you have strong convictions based on prior data trends.
• Post-release trading: Use a 5-minute wait to assess reaction and catch follow-through once the initial volatility settles.

4. Identify Affected Asset Classes

Key instruments to watch:

• USD pairs (especially USD/JPY and EUR/USD)
• US indices (e.g. Dow Jones, S&P 500)
• Treasuries (T-notes)
• Industrial and manufacturing stocks (e.g. Caterpillar, Honeywell)

Example Trade Setup:
If durable goods orders beat expectations and the Dow Jones is testing resistance, a breakout trade aligned with improving macro sentiment may follow.

5. Combine with Leading Indicators

Durable goods complement other macro signals. For the strongest trade signals, combine with:

• ISM Manufacturing PMI
• Retail sales
• Non-Farm Payrolls
• Business confidence indices

If all suggest strong growth, then durable goods data can act as a powerful catalyst for risk-on trades.

6. Technical Confirmation Enhances Reliability

Let fundamentals guide direction, and technicals fine-tune entries. For instance:

• A bullish durable goods print with USD/JPY breaking above a key moving average confirms a long entry.
• A bearish release with EUR/USD testing a trendline may provide a breakdown opportunity.

Use volume spikes, RSI divergence, and candlestick signals to validate entries.

7. Risk Management and News Flow

Durable goods orders are just one data point. Avoid overleveraging, especially if:

• Fed meetings are upcoming.
• Geopolitical tensions are high.
• Other major economic releases are on the same day.

Always size positions based on volatility expectations and use stop-losses aligned with technical structure.

Conclusion: Making the Most of a Durable Goods Orders Strategy

An effective durable goods orders strategy revolves around understanding the components of the report, anticipating market surprises, and combining macro insights with technical confirmation. By focusing on core and capital goods data and using it within a larger trading framework, traders can identify high-quality opportunities that align with broader economic themes.

For more detailed breakdowns on how to integrate economic indicators into your trading plan, explore our in-depth Trading Courses at Traders MBA. Build real-world strategies and sharpen your edge with professional insights.