Shane Oliver

Prelim Domain auction clearances
Syd 59%=final ~59%,Dec avg 56
Mel 64%=final ~61%,Nov avg 60
Clearances are continuing to slide reflecting increasing talk of rate hikes & rising listings on a yr ago suggesting a slowing in the property mkt, but it’s also partly seasonal.
#ausecon

US Uni Michigan consumer sentiment rose slightly but remains weak
1 year ahead inflation expectations fell back to 4.1%
5-10 yr ahead inflation expectations fell back to 3.2% which is around the top of the range of the last few decades
(EvercoreISI and Bloomberg charts)

US Sept real personal spending slowed to flat (mkt was +0.1%mom)
Core PCE deflation rose 0.2%mom/2.8%yoy down from 2.9%yoy in Aug which was in line with expectations
A Fed rate cut next week is a 95% probability according to the US money mkt.
(EvercoreISI charts)

Eurozone shares +0.1% (+0.7% wk)
US shares +0.2% (+0.3% wk)..after earlier +0.6%, Nas +0.3% with core PCE in line with expectations
US 10 yr yld +4bp to 4.14%
Oil +0.8% to $60.1
Gold -0.3% to $4195.7
Iron ore -0.8% to $107.05
Bitcoin $89.2k
ASX futures -0.15%
$A 0.6641 w $US flat

Weekly economic and market update - the Santa Rally; Aust econ stronger; cut public spending to ease capacity constraints; RBA to hold but sound hawkish; rate hike talk is premature but we now expect RBA on hold next year

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

Eurozone shares +0.4%
US shares +0.1%, Nasdaq +0.2%
US 10 yr yld +4bp to 4.1%
Oil +1.1% to $59.7
Gold flat at 4208.6
Iron ore -0.2% to $108
Bitcoin $92.4k
ASX futures +0.2%
$A 0.6612 with $US flat

Australia’s goods trade surplus widened in October to $4.4bn with stronger exports (+3.4%mom) versus imports (+2%mom).

Australian household spending rose a stronger than expected 1.3%mom/5.6%yoy reflecting a pick up in discretionary spending on clothing & furnishings reflecting promotional events & on hospitality thanks to cultural events. No need for a rate cut here (at least for now)

Eurozone shares +0.2%
US shares +0.3%, Nasdaq +0.2% as soft ADP emp reinforces Fed rate cut expectations
US 10 yr yld -3bp to 4.06%
Oil +0.8% to $59.1
Gold +0.1% to $4208.2
Iron ore +0.8% to $108.2
Bitcoin $92.96k
ASX futures +0.3%
$A 0.6601 with $US index -0.3%

Real household disp income is up from its recent lows helped by real wages grth & rate cuts but income tax is back to being a drag again.
Productivity is also up from its lows but needs to improve more to sustain the recovery in real incomes.
Real unit labour cost growth -0.1%qoq

…the bad news is domestic price growth was high at +0.8%qoq driven by higher consumer prices (confirming the Q3 CPI)

Some good news was that productivity +0.2%q & is up 4 qtrs in a row at +0.8%y

And the household saving rate rose to 6.4% & is up from its recent low
ABS charts

Aust Sept qtr GDP +0.4%q <exp but +2.1%y due to revisions.
Consumer spending Just 0.5%q, but dwelling inv +1.8%q, biz inv +3.2% & public spending +1.2%q with drags from trade & inventory. Per capita GDP was flat & just +0.4%y. Overall slightly >RBA forecasts but neutral for rates
(ABS charts)

Eurozone shares +0.3%
US shares +0.25%, Nasdaq +0.6%
US 10 yr yld flat at 4.09%
Oil -1.4% to $58.6
Gold -0.8% to $4205.8
Iron ore +0.8% to $107.3
Bitcoin $91.6k
ASX futures +0.1%
$A 0.6565 with $US index flat

Aust Q3 current account deficit flat at 2.3% of GDP
Export volumes +1%q, imports +1.5%q
Net exports to cut -0.1%pt from Q3 GDP but offset by public spending +1.2%q which adds 0.4%pts. Taken together with softer biz data yesterday this leaves our Q3 GDP forecast at +0.7%q/2.2%y

Oct building approvals -6.4%m after +11%m in Sep with volatile units -13%m
Approvals are running ~190k pa which, slightly > our current estimate of underlying housing demand at 185k pa but well below the Housing Accord target of 240k pa & not enuf to cut the 200-300k housing shortage by much

Eurozone shares flat
US shares -0.5%, Nas -0.4%
US 10 yr yld +8bp to 4.09%…as Japan ylds up as Dec BoJ hike firms and Hassett firms in betting odds for Fed Chair
Oil +1.6% to $59.5
Gold flat at $4238.9
Iron ore +0.8% to $106.5
Bitcoin $85.8k
ASX futures +0.1%
$A 0.654 w $US flat

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

The ANZ Indeed job ads indicator fell again in November and continues to point to slower jobs growth ahead.

The Nov MI Inflation Gauge rose 0.3%mom/3.2%yoy

The trimmed mean rose 0.3%mom whcih is on the high side but is only running a bit above 2%yoy suggesting downside for the ABS’ trimmed mean. That said the MI version has tended to run below the ABS’ for much of the last 2 decades.

Aust Nov home prices up 1%mom with Bri,Per & Ade still booming but Syd & Mel slowing a bit. The rate cuts,housing shortfall & FHB support will likely keep prices rising in 2026 but gains may slow given rate uncertainty,worsening affordability & APRA moves to slow investors

Prelim Domain auction clearances
Syd 62%=final ~61%,Nov avg 60
Mel 68%=final ~65%,Nov avg 61
Clearances rose in Mel but fell in Syd, but with both down in November - looks partly seasonal but with the less favourable RBA rate outlook & rising listings also impacting.
#ausecon

Eurozone shares +0.3% (+2.8% wk)
US shares +0.5% (+3.7% wk, +0.1% mth), Nasdaq +0.65%
US 10 yr yld +2bp to 4.01%
Oil -0.6% to $58.55
Gold +2% to $4239.4
Iron ore +0.8% to $105.7
Bitcoin $91.1k
ASX futures +0.1%
$A 0.655 with $US index -0.1%
(Bloomberg chart)

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

YouTube video by Simplifying Investing Podcast Markets, Midterms & Money Moves Explained: Episode #164

Here’s our latest podcast looking at: bitcoins plunge; Trump’s tariff roller coaster and what’s it achieved; the Fed; the Santa rally; and housing affordability.

youtube.com/watch?v=Zv9I...

Aust credit growth accelerated further to 0.7%m/7.3%y with a pick up in biz lending, slower personal lending and a further slight acceleration in housing lending. The latter was driven by yet another surge in investor lending which explains APRAs move & it may have to do more.

Eurozone shares flat
US closed, futures flat
Ger 10 yr yld +1bp to 2.68%
Oil +0.9% to $59.1
Gold -0.1% to $4157.6
Iron ore -0.5% to $104.8
Bitcoin $91.5k
ASX futures -0.3%
$A 0.653 with $US index flat

Australian business investment surged 6.4%qoq in Sept qtr with bldings +2.1%q & equipment +11.5%q on the back of surging IT investment in data centres & transport inv (aircraft). We now expect Sept qtr GDP growth of 0.7%q/2.2%y.
Capex plans for 2025-26 are now solid at +7.1%y

..regarding the APRA move to limit hi DTI loans to 20% of each bank’s lending from 1 Feb…the aggregate ratio at present is well below that suggesting it may be a while before it has much impact. It’s really a shot across the bows of the lenders not to let things heat up too much

As foreshadowed APRA will cap high debt to income lending from 1 Feb at 20% of home loans. While APRA says the aggregate is below that the move is pre-emptive & designed to cool investor activity before it gets too hot. This & less rate cuts will constrain home price grth next yr (APRA statement)

Eurozone shares +1.5%
US shares +0.7%, Nasdaq +0.8%
US 10 yr yld -0.5bp at 3.99%
Oil +1.1% to $58.6
Gold +0.8% to $4163.7
Iron ore +0.7% to $105.3
Bitcoin $89.9k
ASX futures +0.2%
$A 0.6518 with $US index -0.3%