Shane Oliver

China remained in consumer and producer price deflation in September but it eased slightly with core (ex food and energy) inflation rising from 0.9%yoy to 1%yoy…possibly reflecting anti-involution policies (to reduce excess capacity).

The rise in median age of parents in Australia since the 1970s is not surprising - but I didn’t realise it fell for mothers over the prior fifty years.
(ABS data)

Home building completion times in Australia from the time of approval are still running way up on a decade ago (reflecting excessive regulatory requirements, labour and material issues etc) and are one key reason why we can’t build enough homes.

Aust June qtr dwelling completions slumped & were just 174k in the 2024-25 yr, with commencements just 179k, both way below the Building Accord target to build 240k new homes a year. At least approvals are trending up but are currently running around 190k..still way below target

Eurozone shares -0.3%
US shares -0.2%, Nas -0.8% with US/Ch trade spat continuing but Powell on track for Oct rate cut & close to ending QT
US 10 yr yld flat at 4.03%
Oil -1.7% to $58.6
Gold +0.8% to $4142.9
Iron ore -0.3% to $105.8
Bitcoin $113k
ASX futures +0.8%
$A 0.6485 with $US -0.1%

RBA minutes reiterated “cautious & data dependent” guidance: private demand a little >exp, labour mkt still a little tight, mkt services & housing in mthly CPI suggest upside risks to Q3 CPI…but cash rate probably a little restrictive. Our base case is for a Nov cut but its a close call

Australian August arrivals data is continuing to give mixed messages with visa data (green line) pointing down but net arrivals data (red line) pointing up. Actual net overseas migration data (blue line) is in between but trending down roughly in line with Gov budget projections.

Aust Sept NAB survey showed conditions unchanged at an okay +8 and confidence up slightly to +7
Employment fell slightly and is pointing to some slowing in jobs growth.
Final price pressures up a bit but still around contained levels (higher than pre covid - but that was when inflation was < target)

Eurozone shares +0.7%
US shares +1.6%, Nasdaq +2.2% with de-escalatory rhetoric re trade from US & China
US 10 yr yld closed at 4.03%, futures little changed
Oil +1.4% to $59.7
Gold +2.3% to $4109.1
Iron ore +0.3% to $106.1
Bitcoin $115.7k
ASX futures +0.3%
$A 0.6515 w $US +0.2%

Chinese exports (+8.3%yoy) and imports (+7.4%yoy) both rose more than expected in September. Exports to the US, Africa and Latin America rose (although it’s just a flick off the bottom to the US).
(Goldman Sachs chart)

Aust Cotality home prices Oct month to date:
Syd +0.3%mom (+0.7% mthly rate)
Mel +0.3%
Bri +0.5%
Ade +0.4%
Per +0.7%
5 capital city avg +0.4%mom (+0.9% mthly rate)

The upswing in prices on the back of rate cuts & poor supply continues with the expanded low deposit scheme helping

Super-sized backdown as Chalmers retreats on $3m superannuation tax The treasurer has backed down significantly on his plans to apply an extra 15 percentage points of earnings taxation to balances over $3 million.

This makes more sense now!

www.afr.com/politics/fed...

Prelim Domain auction clearances
Syd 71%=final ~71%,Oct norm 63%
Mel 74%=final ~73%,Oct norm 64%
Clearances are down a bit so far this mth (seasonal?) but remain strong helped by lower rates, the boost to FHBs from the expanded 5% deposit scheme and constrained supply.
#ausecon

Trumps threat to impose +100% tariff on imports from China from 1 Nov after Ch rare earth controls would take US avg tariff back up above 30%. This & threat to cancel the meet with Xi look like negotiating ploys.Time will tell but pressure to reach a deal is hi ahead of mid terms

Eurozone shares -1.5% (-1.8% wk)
US shares -2.7% (-2.4% wk) with Trump +100% tariffs on China after China rare earths controls from 1 Nov
US 10 yr yld -11bp to 4.03%
Oil -4.2% to $58.9
Gold +1% to $4018
Iron ore +0.8% to $105.8
Bitcoin $113k
ASX futures -0.9%
$A 0.6467 w $US -0.7%

Weekly economic and market update - RBA's Bullock remains cautious & data dependent; US shutdown risks; what's driving gold up - is it a bubble?; RBNZ cuts to 2.5% but little read through to RBA

www.amp.com.au/resources/in...

Eurozone shares -0.4%
US shares -0.3%, Nasdaq -0.1%
US 10 yr yld +2bp to 4.14%
Oil -1.4% to $61.5
Gold -1.7% to $3976.2
Iron ore +1.3% to $105.35
Bitcoin $121.2k
ASX futures -0.4%
$A 0.6555 with $US index +0.4%

"5% deposit is ridiculous!" Mark Bouris & Shane Oliver - Y Home Loans — Dr Shane Oliver is head of investment strategy and chief economist at AMP Capital. He has a PhD in economics and a graduate diploma in applied finance and investment from the Securities Institute of...

I had a great chat with Mark Bouris on the Australian property market, interest rates, tax, government spending and lots of other things.

yhomeloans.com.au/videos/mark-...

Eurozone shares +0.6%
US shares +0.6%, Nasdaq +1.1% with Fed minutes providing no hawkish surprises
US 10 yr yld 0.2bp to 4.12%
Oil +0.5% to $62.4
Gold +1.5% to $4043.6
Iron ore -0.1% to $104
Bitcoin $123.3k
ASX futures +0.4%
$A 0.6587 with $US index +0.1%

www.amp.com.au/resources/in...

RBNZ cut 0.5% to 2.5%, due to “prolonged spare capacity” & to boost to spending. Guidance was dovish with the money mkt allowing for 1 or 2 more 0.25% cuts. RBNZ has now cut by more than other major central banks, as it overdid the tightening.
(Macquarie Macro Strategy chart)

Eurozone shares -0.3%
US shares -0.4%, Nasdaq -0.7%
US 10 yr yld -3bp to $4.13%
Oil +0.6% to $62
Gold +0.5% to $3982.2
Iron ore flat at $104.1
Bitcoin $122.2k
ASX futures -0.01%
$A 0.6582 with $US index +0.4%

Australian ANZ-Indeed job ads fell 3.3% in September and remain in a downtrend.

The October Westpac/MI consumer survey showed a further rise in home price expectations to a 15 year high. Perceptions regarding the time to buy a dwelling improved marginally but remain soft historically reflecting poor affordability.

Australian Westpac/MI consumer confidence -3.5% to a soft 92.1 reflecting higher inflation & last weeks more hawkish RBA commentary. Perceptions of family finances fell, with the time to buy major items also down. Unemployment expectations fell but r well up from their 2022 lows

Eurozone shares -0.4% with French shares -1.4% on latest political turmoil
US shares +0.4%, Nasdaq +0.7%
US 10 yr yld +3bp to 4.15%
Oil +1.3% to $61.7
Gold +1.9% to $3961
Iron ore +0.3% to $104.1
Bitcoin $125.2k..making a new record hi
ASX futures +0.1%
$A 0.6613 w $US +0.3%

Relative Return Insider: Will the RBA cut rates by year-end? In the latest episode of Relative Return Insider, host Keith Ford and AMP chief economist, Dr Shane Oliver, discuss this week’s RBA interest rate decision, a potential government shutdown in the US, a...

www.investordaily.com.au/podcast/5791...

Prelim Domain auction clearances
Syd 74%=final ~74%,Oct norm 63%
Mel 70%=final ~70%,Oct norm 64%
Clearances r remaining strong with any fall in rate cut optimism offset by the boost to FHBs from the expanded 5% deposit scheme,so demand is strong at a time of low supply.
#ausecon

US Sept services ISM -2pts to a weak 50 with new orders down and employment remaining weak. Prices paid remain elevated reflecting the tariffs.

(Bloomberg charts)

Eurozone shares +0.2% (+2.7% wk)
US shares flat (+1.1% wk), Nasdaq -0.3%
US 10 yr yld +4bp to 4.12%
Oil +0.7% to $60.9
Gold +0.8% to $3886.5..new record hi
Iron ore -0.2% to $103.8
Bitcoin $122.6k
ASX futures +0.3%
$A 0.6594 with $US index -0.1%
(Bloomberg chart)