US Durable Goods Surge 5.3% as Fed Braces for 'Hawkish Pause'

Washington — The US economy demonstrated unexpected resilience on Monday, with Durable Goods Orders surging 5.3% in November, shattering market expectations of a modest 0.5% expansion. This data release comes at a critical juncture, as the Federal Reserve prepares for a pivotal FOMC meeting where a pause in the easing cycle is widely anticipated.

Market Data Snapshot

• Headline Orders: 5.3% (vs 0.5% expected)
• Total Volume: $323.8 billion
• Core Capital Goods: +0.7%
• Unemployment Rate: 4.4%
• Core Inflation: 2.6%

Manufacturing Resilience Complicates Fed Outlook

The US Census Bureau reported that durable goods orders reached $323.8 billion, a sharp reversal from the previous months 2.1% contraction. The rally was driven largely by commercial aircraft and capital equipment, with core capital goods orders (excluding defense and aircraft) rising 0.7%. This metric, a proxy for business investment plans, suggests that despite high interest rates, the industrial engine of the US economy is re-accelerating.

Combined with a stabilizing unemployment rate of 4.4% and core inflation holding at 2.6%, the data undermines the narrative that a recession is imminent. “The situation is not urgent; there is no need for the Fed to take any action,” noted Yelena Shulyatyeva, senior economist at the Conference Board, highlighting the “fragile balance” of the labor market.

The FOMC Dilemma: Pause or Pivot?

Markets have priced in a “pause” for the upcoming Federal Reserve meeting, with policy rates expected to hold steady. However, the path forward for 2026 remains fiercely debated among Wall Street giants:

• Goldman Sachs foresees the first rate cut of the year delayed until June.
• Morgan Stanley has adopted an extremely hawkish long-term view, predicting rising yields and potentially no cuts until late 2027.
• JPMorgan has abandoned forecasts for an immediate easing cycle.

Internal fissures at the Fed are widening. While New York Fed President John Williams and Governor Christopher Waller signal comfort with the current “neutral” stance, political pressure is mounting. Fed Chair Jerome Powell faces the dual challenge of managing market expectations and navigating intensified scrutiny from the executive branch and DOJ inquiries.

For the US Dollar, this “higher for longer” narrative, bolstered by strong data, limits downside risk, though geopolitical hedging continues to play a role in short-term valuations.