Reaction to Dec durable goods orders rise

NEW YORK (Reuters) - New orders for long-lasting U.S.-made manufactured goods rose by a much bigger-than-expected 5.2 percent in December and a key gauge of business spending also surged, a Commerce Department report showed on Tuesday.

KEY POINTS: * Non-defense capital goods orders excluding aircraft, a proxy for business investment, rose a much greater than-expected 4.4 percent. It was the first rise in that category since September. * Analysts polled by Reuters had expected orders for durables to rise 1.5 percent and for non-defense capital goods excluding aircraft to rise 0.1 percent.

COMMENTS:

T.J. MARTA, FIXED INCOME STRATEGIST, ROYAL BANK OF CANADA CAPITAL MARKETS, NEW YORK:

"The surge was driven by the largest rise in machinery since December 2006, along with surges in communications gear, aircraft and transportation equipment. Big Picture: We are witnessing the positive impact of the cheap U.S. dollar on the economy, and the reason we only believe the economy will flirt with recession rather than falling into a full fledged one."

IAN SHEPHERDSON, CHIEF U.S. ECONOMIST, HIGH FREQUENCY ECONOMICS, VALHALLA, NEW YORK:

"We expected the strong headline number because Boeing received orders for 277 aircraft in December, up from 177 in November, but the 4.4 percent jump in core capital goods orders (ex-defense and aircraft), which propelled the ex-transportation number, was a surprise. There were big gains in machinery, up 7.6 percent, and computers and electronics, up 4.6 percent. A strong report, then, but it surely cannot last in the face of the drop in activity reported by manufacturing surveys. If Friday's ISM survey is anything like as weak as the Philly Fed suggests -- about 42/43, down from 47.7 -- then the trend in orders will turn rapidly south."

LINDA DUESSEL, MARKET STRATEGIST, FEDERATED INVESTORS, PITTSBURGH, PENNSYLVANIA:

"This is a pretty good number, but we are going to get a lot more information this week, including jobs data and GDP, which will be a better indicator for whether or not the market jumped the gun on worrying about recession.

"Durable goods has not been talked about all that much, but what it does show is that while there may be some slowdown around the globe, maybe it is not slowing enough to hurt durable goods. Technology is a big piece of this -- things still look strong for those companies, particularly overseas.

"But given the way the market feels right now, always focusing on the negative, it would look at this and say -- could this stop the Fed from their cutting?"

MARC CHANDLER, SENIOR CURRENCY STRATEGIST, BROWN BROTHERS HARRIMAN, NEW YORK:

"Durable goods orders is a very volatile series but the higher-than-expected jump is giving traders a taste of what may still come in regards to economic data this week. That is, the dollar was being traded as if the country was already in recession, but not all data supports that."

BORIS SCHLOSSBERG, SENIOR CURRENCY STRATEGIST, DAILYFX.COM, NEW YORK:

"Relatively good news for the U.S. economy, but I don't know if this will be really good news for the U.S. dollar. We seem to be at a stand still because generally the consensus is still a 50 basis points cut tomorrow from the Fed, although it does alleviate some of the pressure for them to cut. It certainly undercuts the argument that we are on the verge of tipping into a recession. It's a very bullish number. Ironically, if we have a stock market rally today, that would be dollar negative because we get more carry trade and risk assumption coming back to the market. For the time being it looks like the market really doesn't want to do anything ahead of the FOMC."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA:

"The durable goods report suggests that the economy is probably in better shape than a lot of people thought, although it is only one month. This report is notoriously choppy. Certainly it is not going to prevent the Fed from cutting rates tomorrow. It was a big negative for bonds and a big positive for stocks."