Demand for housing finance continues to lift
Australia: Housing finance was in line with our expectations, rising 2.4% in July. For the year to July, housing finance for owner occupiers has increased 15.9%, up from an annual rate of 12.9% in the year to June. The total value of home loans (including investor home loans) rose 1.1% in July. The demand for housing finance continues to lift, reflecting the broader improvement in the housing market, due to low interest rates, low rental vacancy rates, improved rental yields and housing affordability.
ANZ job ads fell 2.0% in August, which was the sixth consecutive monthly decline. This suggests the unemployment rate will rise further.
Share Markets: Sentiment was buoyed by Chinese trade data released over the weekend. Exports were stronger than expected and provide a positive sign that global growth is improving. Meanwhile, uncertainty remained on the possibility of a strike against Syria. The Dow rose 0.9% and the S&P500 lifted 1.0%.
Bonds: US treasuries continued to be affected by the weaker jobs data released on Friday. Yields on 10-year notes fell 2 basis points to 2.91%, down from the highs of near 3% last week.
The jobs data has prompted analysts to pare back their expectations for Fed tapering. Consensus now expects the Federal Reserve to scale back its asset purchases by $10bn a month, down from an estimate of $15bn surveyed previously.
Foreign Exchange: The US dollar weakened against most currencies as expectations that the Fed would taper by a smaller amount increased. The Australian dollar gained slightly, supported by the positive Chinese data and improved risk appetite. AUD, currently trading around 0.923, is around its highest level in more than a month. The Australian dollar however, fell against the euro, which strengthened on a pickup in euro zone confidence. As Tokyo won its bid to host the 2020 Olympic Games, then yen fell as risk appetite increased.
There will be business confidence in Australia to watch today, although Chinese industrial production and retail sales may have a larger impact on currency markets and the AUD today.
Commodities: Commodity prices were mixed, although the broad CRB index was dragged down by oil prices. Oil prices fell sharply as the possibility of a military strike on Syria appeared to be put on hold. Prices of other commodities including copper gained, supported by positive data from China.
China: CPI inflation was in line with expectations rising 2.6% in the year to August, down from a 2.7% annual rate in July.
Producer price inflation fell 1.6% in the year to August, a lift from the -2.3% annual rate in the year to July.
Europe: Eurozone Sentix investor confidence rose from -4.9 to 6.5 in September, a fresh multi-year high.
Japan: GDP growth in Q2 was revised up to an annualised rate of 3.8%, from the earlier estimate of 2.6%. In other data, Japan's current account balance climbed to ¥577.3bn in July, from ¥336.3bn in June.
United States: Consumer credit rose US$10.4bn in July, below expectations of $12.7bn and followed a $11.9bn increase in June.