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Durable goods orders bounced in January after dropping steeply in December. A surge in civilian aircraft orders helped, but gains were broadly based. Manufacturing is still under pressure, but this is a good report.

Durable goods orders increased 4.9 percent in January and last month’s report of a decline in December orders was revised to a smaller drop. A 54.2 percent surge in civilian aircraft orders helped explain the outperformance, but this was not the only factor. Every major category of orders posted at least some increase in January.

The surge in civilian aircraft orders was widely expected. The biggest surprise in today’s report relative to consensus expectations was the 3.9 percent pop in orders for core capital goods. This is a departure from a run of negative signals about future business spending. The Bureau of Economic Analysis (BEA) uses the shipments of these goods in its calculation of business spending in the GDP report. Shipments were actually off a bit in January (down 0.4 percent), although December’s scant increase of 0.2 percent was revised sharply higher to a more respectable gain of 0.9 percent

While today’s report breathes some life into the outlook for the troubled manufacturing sector as well as prospects for business spending, we are not out of the woods yet. Core capital goods orders and shipments are both falling on a three-month annualized basis. The new orders component of the ISM index returned to expansion territory in January after two months of signaling contraction, but some regional purchasing manager surveys were negative in February. The most recent example was the Richmond Fed survey which showed new orders and orders backlogs moved into negative territory and last week the New York Fed’s empire survey also showed another decline in orders

Inflation data out Friday morning will be key for markets trying to project the path of Fed tightening. Investors will also continue to look for signs of stabilization in oil prices.

The Federal Reserve's preferred measure of inflation, the price index of personal consumption expenditures that excludes food and energy, is due at 8:30 a.m. ET.

"I've been in agreement with the market that inflation's dead, but that's old fashioned," said Bryce Doty, senior fixed income manager with Sit Investment Associates.

While expectations for the bulk of U.S. data due Friday point to support for stocks, overseas news remains the wild card.

"We are still in a very fragile market," said Athanasios Vamvakidis, head of G10 FX strategy in Europe at Bank of America Merrill Lynch. "There are many market concerns about a number of risks at a time the market (has less) belief central banks will come to the rescue."

Those include a potential "Brexit" and negative impact from a sharp slowdown in China's economy. While the country's financial markets are not necessarily an indicator of growth, traders are watching how authorities manage the situation.

China’s central bank tweaked the description of its monetary policy stance to reflect a recent ramp-up in liquidity injections and moves to guide money market rates lower, with Governor Zhou Xiaochuan highlighting scope for further actions if needed.

"China still has some monetary policy space and multiple policy instruments to address possible downside risks," Zhou said at a conference in Shanghai, speaking hours before meeting his counterparts from the Group of 20 developed and emerging markets. Asian stocks, industrial metals and higher-yielding currencies rose.

The People’s Bank of China separately published a statement defining current policy as "prudent with a slight easing bias." The PBOC had previously used language pledging to maintain a prudent policy while maintaining "reasonable, ample" liquidity.

"China still has the room to loosen fiscal policy," Finance Minister Lou Jiwei said Friday in comments at the start of the G-20 meeting, which he’s co-hosting with Zhou. Policies should include cutting red tape, targeted tax breaks, and increasing the mobility of migrant workers, Lou said.

The latest comments confirm "the underlying reality that the central bank is doing its bit to cushion growth and keep the wheels churning," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc. "Today’s statement is thus a deliberate signal to FX traders the world over not to fret too much over the PBOC’s firepower."

China's central bank wants private capital for green investment. Amid ongoing volatility in Chinese and global markets, the People's Bank of China (PBOC) is urging investors to play a greater role in green financing, i.e. the funneling of private capital to fund environmental projects and clean technology.

Speaking to CNBC on Thursday, PBOC chief economist Ma Jun said the world's second-largest economy requires 2-4 trillion renminbi ($315-630 billion) in green investments to face national environmental challenges, which range from air and water pollution to land contamination.

But the government alone can't bear those costs, he warned.

"The public sector can only provide a maximum of 15 percent [of the 2-4 trillion renminbi] so the majority will have to come from the private sector....The financial system has to play a role in mobilizing private capital for green investment."

But even as investors increasingly shun riskier assets, the PBOC believes demand for green debt will remain intact.

Today, The People's Bank of China injected CNY300 billion via seven-day reverse repos at open-market operations. Total, this week PBOC injected CNY880 billion into open-market operations.

The monetary authority has added 880 billion yuan ($88.8 billion) to the financial system this week via auctions of seven-day reverse-repurchase agreements, less than the 960 billion yuan of contracts that mature through Friday.

This resulted in a net drain of CNY80 billion for the week.

Crude oil prices dipped on Friday as reports of a meeting by oil producers to freeze output failed to convince traders that enough effort was being made to rein in ballooning global oversupply.

International Brent crude futures LCOc1 were trading at $35.11 per barrel at 0429 GMT (11:29p.m. ET), down 18 cents from their last settlement. U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 5 cents at $33.02.

"Capping production at January levels, when the market was pumping out well over a million barrels of crude a day above what consumers need, will in no way reduce overcapacity. In fact, given that Iran has started to return to markets since January, it'll worsen the glut," said one senior oil trader.

Reference: Wells Fargo’s Economic Indicators Reports, CNBC, Bloomberg, MNI News, Reuters