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%

US initial jobless claims -6k and remaining low, but continuing claims +7k with rising trend…“low firing but low hiring” Sep durable goods orders +0.5%mom (as exp) but capital goods orders & shipments ex aircraft and defence both up 0.9%mom and trending higher (Bloomberg chart)

..and guess where a lot of the inflation is coming from! Market related price inflation has picked up to 2.8%yoy… …but prices which are largely govt administered or indexed under govt regulation are up 7.8%yoy

Oliver's Insights - Housing affordability at a record low - here's four key ways to fix it www.amp.com.au/resources/in...

Electricity prices are +37%yoy due to the roll off of state rebates a year ago, but -10%mom as NSW and ACT got catch up Fed rebates. Electricity prices are roughly 21% below where they would be without the rebates. Which means pressure on Fed Gov to extend them beyond this yr

Key drivers of the further pick up in annual inflation were electricity (as yr ago rebates dropped out), food, holiday travel (school holiday related) and housing costs starting to hook up again (altho that for rent was due to less Commonwealth rent assistance).

Aust’s new mthly CPI showed another lift to 0%m/3.8%y with new trimmed mean 0.3%m/3.3%y. Goods inflation is well up & there are now more items above 3%y than below 2%y. The chance of another rate cut next yr has taken another hit - but this new data needs to be treated cautiously

Soft US data Sep retail sales just +0.2%m, control -0.1%m Nov consumer confidence -7pts and nearly back to Liberation Day lows. Jobs plentiful/hard to get slightly better but weak Cotality Sept home prices +0.1%m/1.4%y Sept core PPI 0.1%m/2.6%y Adds to case for Dec rate cut (Bloomberg chart)

Eurozone shares +0.8% US shares +0.9%, Nas +0.7% as soft US data adds to probability of Dec rate cut. Money mkt now at 82% prob US 10 yr yld -3bp to 4% Oil -1.6% to $57.9 Gold -0.1% to $4130.7 Iron ore -0.2% to $104.5 Bitcoin $86.8k ASX futures +1.1% $A 0.6464 w $US index -0.3%

Eurozone shares +0.3% US shares +1.5%, Nas +2.7%..dovish Fed speakers (what a soap opera!). Money mkt prob of Dec cut now back to 80% US 10 yr yld -3bp to 4.03% Oil +1.4% to $58.9 Gold +1.7% to $4134.6 Iron ore +0.4% to $104.6 Bitcoin $88.8k ASX futures +0.4% $A 0.656 w $US flat

Prelim Domain auction clearances Syd 64%=final ~62%,Nov avg 60 Mel 65%=final ~63%,Nov avg 61 Clearances slowing with less rate cut optimism & rising listings but looks partly seasonal. Avg clearances fall ~6-7% Aug to Nov. Support remains from the 3 rate cuts & low deposit FHB scheme. #ausecon

US University of Mich consumer sentiment remaining very weak 1 yr ahead inflation expectations fell to 4.5% from 4.7% 5-10 yr ahead inflation expectations fell to 3.4% from 3.6% (which is getting closer to levels more consistent with the 2% inflation target) (Bloomberg charts)

Eurozone shares -1% (-3.1% wk) US shares +1% (-1.9% wk) as Feds Williams see room for a near term rate cut (mkt back to 60% prob for Dec) US 10 yr yld -2bp to 4.06% Oil -1.6% to $58 Gold -0.3% to $4065 Iron ore -0.05% to $104.3 Bitcoin $84.2k ASX futures +1.1% $A 0.645 w $US flat

Australia’s November composite PMI rose to a solid reading of 52.6, with stronger manufacturing & orders in a rising trend. But employment plans fell. Output prices rose but the trend is down suggesting softer December quarter inflation. (Macquarie Macro Strategy charts)

Eurozone shares +0.5% US shares -1.6% after +1.9%,as concerns re valuations, speculation & Fed cuts returned. Now -5.1% v hi. Nas -2.2% US 10 yr yld -4bp to 4.09% Oil -1.3% to $58.7 Gold +0.2% to $4079.6 Iron ore -0.2% to $104.4 Bitcoin $87.1k ASX futures -1.7% $A 0.644 with $US +0.1%

US Nov Phily Fed manufacturing index +11 points to a still soft -1.7pts, with new orders down but employment up. Prices paid rose and are still elevated. (No clear signal here for Fed)

US delayed jobless claims now released and show initial claims little changed, but continuing claims continuing to rise. So no dramatic weakening and it’s still a low firing but low hiring environment. (EvercoreISI charts)

US Sept payrolls +119k, >exp but payrolls revised down by 33k for months, hrs wkd were flat, unemployment rose unexpectedly to 4.4% & wages growth was unchanged at 3.8%yoy. And the trend in payroll grth is down. Overall this is neutral for Fed interest rates. (EvercoreISI charts)

Nvidia shares up around 5% in after hours trading and US S&P 500 share futures +0.8% as Nvidia beats on earnings, sales and guidance. (Bloomberg chart)

Eurozone shares +0.1% US shares +0.4%, Nasdaq +0.6%. Nvidia +4% in late trading as Dec qtr sales guidance beats US 10 yr yld +2bp to 4.13% Oil -2.1% to $59.5 Gold +0.1% to $4073.4 Iron ore +0.6% to $104.6 Bitcoin $89.7 ASX futures +0.6% $A 0.6466 with $US +0.5%

Fed mins highlight divided Fed with “many” officials thinking it will be appropriate to hold Dec against “several” who see a cut. Oct jobs data (unemp & payrolls) to be added to Nov & not released to Dec 16 add to uncertainty, but fall in mkt prob of Dec cut to 30% look overdone

Australian real wages growth slowed to a crawl last quarter and real wages are still down 6% on 5 years ago (with prices up 23% since December 2020 but wages up just 17%). Our wages leading indicator still points to a further slowing in wages growth ahead.

Australian wages growth is strongest in utilities, public admin and health and weakest in finance and insurance. (ABS charts)

..the % of workers seeing a wage rise of 4% or more continues to fall. Stable wages grth at 3.4%y is consistent with the jobs mkt being balanced, not tight. Slowing priv wages grth (more important for infl) leaves the door open for another rate cut but the RBA wont be hurrying

Aust Sept qtr wages grth flat at 0.8%q/3.4%y (in line with RBA & mkt). The details were on the soft side tho with public sector wages grth elevated at 3.8%yoy but private wages grth slowing to 3.2%yoy & private workers seeing a lower avg rise than a yr ago (3.6% v 3.9% yr ago)..

Eurozone shares -1.9% US shares -0.8%, Nasdaq -1.2% ahead of Nvidia results US 10 yr yld -2bp to 4.11% Oil +1.7% to $60.7 Gold +0.6% to $4067.3 Iron ore -0.3% to $104.05 Bitcoin $62.8k ASX futures -0.2% $A 0.6504 with $US index flat

RBA Minutes reiterated its cautious stance: higher infl could mean less capacity in the econ, the labour mkt is a little tight & theres uncertainty about how restrictive policy is. The RBA discussed scenarios for further easing & rates on hold but the hurdle for another cut is hi

Eurozone shares -0.9% US shares -0.9%, Nas -0.8% ahead of Nvidia & payrolls. Fed’s Waller & Jefferson dovish US 10 yr yld -2bp to 4.13% Oil -0.3% to $59.7 Gold -1% to $4043 Iron ore +0.9% to $104.4 Bitcoin $91.6k..down with shares ASX futures -0.6% $A 0.649 with $US +0.3%

Cotality home price data Nov month to date Syd +0.5% (=0.8% at mthly rate) Mel +0.2% Bri +0.9% Ade +0.8% Per +1.2% 5 city av +0.6% (=1.1% at mthly rate) Property price growth remains strong so far this mth despite talk rates may have bottomed with 5% deposit scheme likely helping

Prelim Domain auction clearances Syd 67%=final ~66%,Nov avg 60 Mel 66%=final ~63%,Nov avg 61 Clearances r continuing to slow reflecting talk of less rate cuts & rising listings but looks partly seasonal. Support remains from 3 rate cuts this yr & the low deposit scheme. #ausecon

Trump now cutting tariffs as the “cost of living” is back in focus after election losses. So much for the argument that foreigners pay the tariffs & there is no impact on prices for Americans! www.bloomberg.com/news/article...

Eurozone shares -0.9% (+2.2%) US shares -0.05%(+0.1% wk) up from -1.3% with 50 day av holding so far.Nas +0.1% US 10 yr yld +3bp to 4.15% Oil +2.1% to $59.9 Gold -2.1% to $4084 Iron ore -0.2% to $103.5 Bitcoin $94.7k as risk off tone weighs ASX futures -0.2% $A 0.6537 w $US +0.1%

Weekly economic and market update - shares wobble on rates; positives & negatives for shares; $A looking stronger; weak Chinese data; we still expect one more RBA rate cut next year www.amp.com.au/resources/in...

China Oct activity data slowed further to 4.9%yoy for IP, 2.9% for retail sales with investment -1.7% as property inv fell 14.7%. Home prices & prop sales continue to fall. GDP grth this yr is probably still on track for just below 5% but incremental policy stimulus is still likely (Bloomberg table)

Eurozone shares -0.8% US shares -1.7%, Nasdaq -2.3% with hawkish commentary from some Fed officials US 10 yr yld +4bp to 4.11% Oil +0.2% to $58.6 Gold -0.4% to $4177.3 Iron ore +0.4% to $103.5 Bitcoin $98.5k..down with shares ASX futures -1.6% $A 0.6529 with $US index -0.2%

The declining trend in job openings still points to a further slowing in Australian jobs growth ahead.

Aust Oct employment +42k, unemp fell to 4.3% & hrs wkd +0.5%m..all stronger than exp. Employment grth was mainly due to NSW (+41k) & unemp remains in a rising trend..but there is nothing here to change the RBAs interpretation the jobs mkt is a “little tight” & bring on a rate cut

Eurozone shares +1.1% US shares flat, Nasdaq -0.3% US 10 yr yld -5bp to 4.07% Oil -4.1% to $58.5 Gold +1.6% to $4195.3 Iron ore -0.5% to $103.15 Bitcoin $101.6k ASX futures +0.1% $A 0.654 with $US index flat

September net permanent and long term arrivals data for Australia slowed but remains high.

Aust Sep qtr housing finance +9.6%qoq on rate cuts & the rising home values. However,the rise was greater than expected & driven in particular by a 17.6% rise in investor loans with the investor share getting back to levels seen ~2015=> increasing prospects for macro pru controls

Eurozone shares +1.1% US shares +0.2%, Nasdaq -0.3% US 10 yr yld little changed at 4.12% Oil +1.4% to $60.9 Gold +0.5% to $4130 Iron ore +0.6% to $103.6 Bitcoin $102.9k ASX futures +0.2% $A 0.6528 with $US index flat

The Westpac/MI survey showed home price growth expectations remain very strong but perceptions regarding whether now is a good time to buy a dwelling remaining up from lows but still subdued.

Aust Nov Westpac/MI consumer sentiment +12.8% to highest since 2021, which is a bit surprising given the less positive news on inflation & rates lately. And its diverged from the ANZ/Roy Morgan survey. However, the rise was largely driven by those who owned their home outright.

The October NAB business survey showed confidence down slightly and conditions up slightly with both pointing to okay growth… However, the employment component remains consistent with slower jobs growth and cost and price pressures fell.

Eurozone shares +1.8% US shares +1.5% on US Senate plan to end partial Fed Gov shutdown. Nasdaq +2.3% US 10 yr yld +1bp to 4.11% Oil +0.6% to $60.1 Gold +2.7% to $4111.2 Iron ore +0.7% to $103 Bitcoin $105.9k, up with shares ASX futures +0.5% $A 0.6538 with $US index flat

Prelim Domain auction clearances Syd 68%=final ~67% Mel 68%=final ~64% Clearances remain supported by the 3 rate cuts since Feb and the expanded FHB 5% deposit scheme, but are continuing to slow reflecting talk of less rate cuts and a rise in listings. #ausecon