INSTANT VIEW: June durable goods orders better-than-expected

NEW YORK (Reuters) - New orders for long-lasting U.S. manufactured goods rose surprisingly in June on demand for metals, machinery, electrical equipment, and military needs, even though transportation orders were weak, a government report showed on Friday.

Durable goods orders were up 0.8 percent, after a revised 0.1 percent gain in May. When volatile transportation orders were excluded, orders climbed 2 percent last month, the sharpest rise since December. Orders for defense jumped 10.7 percent.

Non-defense capital goods excluding aircraft, viewed as a telling gauge of business spending, jumped 1.4 percent after a revised 0.1 percent decline in May.

COMMENTS:

MATTHEW MOORE, ECONOMIC STRATEGIST WITH BANC OF AMERICA SECURITIES, NEW YORK:

"The durable goods data were stronger than expected. But some of the categories that were up strongly seem to have had price increases, such as metals. As for the real impact on gross domestic product, that could be limited."

"So far bonds have reacted by strongly selling off. Yesterday, there was a bit of a bid for Treasuries amid some financial concerns and nothing major happened overnight. The housing bill is slowly passing through the Senate. All these things are detracting from the flight to quality trade today."

SHAUN OSBORNE, CHIEF CURRENCY STRATEIST AT TD SECURITIES IN TORONTO:

"The overall pattern of business investment in the U.S. is holding up pretty well. These numbers have been good for quite sometime, infact the underlying trend is somewhat firmer in those core numbers and not indicative of the levels that you would normally associate with a recession in the U.S."

"The dollar has given back some of its earlier gains this week overnight, we have seen a bit of a bounce in euro/dollar so far this morning, but it may be that the gains in euro/dollar are going to remain relatively limited. I had expected that we would perhaps test towards 1.5750/15770 this morning. These numbers suggest that we are unlikely to do so. It may give the dollar a small lift into the end of the week."

KEITH HEMBRE, CHIEF ECONOMIST, FIRST AMERICAN FUNDS, MINNEAPOLIS:

"It looks like they were generally pretty stronger than expected across the board with the core capital goods and non-defense ex-aircraft number reasonably strong and the shipments of the core-capital goods certainly stronger, looking like a pretty decent quarter for capital spending.

"The (stocks) futures rallied on the data. But my personal view is that this is probably more backward looking than forward looking and I think that we got some downside in the series as we move into the second half of the year.

"So it is positive, it says things were better than we generally expected as we look back into the second quarter but I think if you look forward into the third and fourth (quarters) the forward-looking indicators are pointing toward some weakness ahead."

JAMES DEMASI, CHIEF FIXED INCOME STRATEGIST, STIFEL NICOLAUS & CO. INC., BALTIMORE:

"This is first really positive piece of data in the past couple of weeks. It's difficult to gauge the context of this number. When we see July economic numbers, the impact of the tax rebate will largely be eliminated from the data."

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:

"This is yet another surprise from durables and all dollar-positive. The last month of each quarter tends to see orders back-loaded and frequently surprises. The non-defense ex-aircraft capital expenditures component is +1.4 pct, pointing to a strong start in Q3, and the shipments number for June was also solid, reinforcing prospects for a solid Q2 GDP.

"All in all, a strong piece of data for the U.S. in contrast with fresh signs of weakness in Europe and the UK. I think stocks will like it, yen crosses will too, and the dollar also."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

"The standout feature is the strength of non-defense capital goods ex-aircraft which jumped sharply in April and gave back a little in May but made another good step up in June. That represents demand for capital equipment either for use domestically or for export. As far as GDP is concerned, either is just as good. There was a big second-quarter increase for these kinds of orders which bodes well for the immediate future."

MARKET REACTION: STOCKS: Benchmark U.S. S&P500 stock index futures edged up on the better-than-expected data to around 1260; BONDS: Benchmark 10-year U.S. Treasury notes fell in price, with the yield around 4.08 percent: CURRENCIES: The U.S. dollar firmed with euro quoted around $1.5710 and the yen around 107.65:

EARLIER DATA FROM JULY 25:

US foreclosures rise 14 pct in 2nd qtr-RealtyTrac