The following article by David Haggith was first published on The Great Recession Blog: As we enter 2017, housing bubbles are showing signs of bursting all over the world. I know I’ve been promising I would lay out the economic headwinds for 2017, but 2017’s headwinds are building so fast and furious that I’m having to break that promised article out into several articles, as I’m accumulating material faster than I have time to cover. I’m going to start with the housing bubbles that are now extremely evident in the US, Canada and Australia, noting that housing is also insane in its own weird way in China again and in many other parts of the world. The point I want to make is that, with housing bubbles now at the peak of popping in several parts of the world, this coming housing market collapse could make the US housing market crash of 2007-2009 look like the warm-up act, and housing is just one area of the global economy that is showing signs of high peril. A 2017 housing bubble collapse in the US may be in the cards As I wrote in “The Inevitability of Economic Collapse,” the whole US economy is a house of cards, but particularly the US housing economy where we have done everything we possibly can to pile up a potential housing collapse as precariously as we did last time around just so we can watch it all fall down again. The hard push to get back to where we were in 2006 has been on for about seven years. In the past few months, housing has been on its fastest tear in the US with the number of new permits being issued for construction in 2017 particularly leaping up like a spring lamb, and that’s with prices that are now generally higher than they were at their peak in 2006. We are showing all the same evidence of an irrational market that we showed going into the Great Recession: That peak was only attained because of lax credit, which made an expanding number of purchases possible after prices went beyond what people could afford. Since wages in real terms (having only recently started to rise in a few industries) are not any better than they were back in the housing crash of ’07-’09 , today’s higher prices are actually less sustainable without dangerously lax loan terms than they were back then. That’s why we have again begun to relax loan terms for individuals buying a house. For the last eleven quarters, more lenders have relaxed mortgage standards than have tightened them. (“Minimum credit scores have dropped. Self-employment documentation has reduced. Maximum loan-to-values have been increased.”) On top of what banks are doing to relax their own self-imposed standards, Trump has ordered a review of Dodd-Frank with the hope of stripping it back in order to get banks to issue more loans in order to juice the economy (and to make things better for his real estate industry). We learn nothing. Cohn said Friday on Fox Business that the executive orders are intended to relieve restrictions and scrutiny that post-crisis regulations have put on banks…. Trump promised to do “a big number” on the Dodd-Frank Act. (Bloomberg) What could be better than a return to the exuberant days of banking deregulation? A Republican article of faith says that banks and the economy can always benefit from further deregulation. Dodd-Frank will be stripped down before it fully goes into practice. The unstated goal here is to fatten up some more bankers and further inflate the housing bubble because we are so incapable of thinking outside of a housing-based economic model. The fact is that bank loans to businesses have never been higher (in total value of loans issued), so there is no problem, as Trump claims there is, of banks not issuing enough loans to businesses. The value of bank loans issued was not even this high just before the Great Recession. Likewise, the total value of bank loans for commercial real estate has never been anywhere near as high as it is right now. So, most likely those who are not being given loans (like perhaps the King of Bankruptcy) probably don’t deserve them. For now, the race to the top in housing is still on, but there are signs that a peak is being reached. I’ referring to signs other than just the fact that we’ve passed the previous peak’s prices. January purchases of existing homes picked up to a pace not seen since 2007. The number of new-home sales jumped 3.7% in one month (in terms of number of units sold). That is in spite of the fact that the median price of a US home has risen 7.1% since the same time last year. One caveat about this rise (until we see where it goes in the next couple of months) is that some of this activity since December’s rate hike may be due to people rushing to buy before interest rates rise even more, now that rate increases by the Federal Reserve are looking certain. With houses in the US now remaining on the market for only fifty days, averaged across the nation (less than a month on the west coast), the market is feeling as searingly hot as it did in 2006 just before prices started to fall. So, that’s one indicator a top may be near. Because of a shortage of inventory (the lowest number of houses on the market since 1999), bidding wars are starting again in cities like Seattle and San Francisco where houses again regularly sell for more than their list price. That kind of bubbling-over race to higher prices ran for a few years in the highest-priced markets before the last housing crash, but it is the kind of frenzy that defines “irrational exuberance” in a housing market. When people scurry to say, “I want to pay you more than you’re asking for” in a market already priced higher than ever before, you’re witnessing the kind of mania that precedes a crash. So, that’s another indicator that a top may be near. One more kind of action that has risen back to pre-Great-Recession levels is house flipping. Foreclosures are being snapped up by mom-and-pop fixer-uppers at a level matching the superheated speculation of the last housing bubble. Some US housing bubbles appear to be popping already. Prices on expensive homes in some places, such as Miami, are now falling quickly. Since early 2016, condo speculators in Miami (who buy condos pre-construction, hoping to sell them for a better price as soon as they are completed) have been pummeled into accepting losses. Inventory is growing in Miami; sales volume is shrinking; and total volume of sales in dollars is declining. Same kind thing is happening in Manhattan where luxury co-op apartment contracts have collapsed 25%. Closings on high-end sales in Manhattan (number of units sold) had fallen 18.6% year on year back in October. Inventory of units in new developments was backed up at that point an additional 27.2% YoY. Barry Sternlich, CEO of the Starwood Property Trust, which finances real estate development, calls Manhattan’s luxury condo situation “a catastrophe” that “will get worse.” Since homes in this segment of the market are typically bought by those people who make a lot of money by working on Wall Street, one has to wonder what this says about the real situation in the world of stocks and finance. From 2017 on, the US housing market will face different kind of bubble bust than it has ever faced before. The baby-boom bubble is now moving out of the housing market. For the next two decades, the fastest rising segment of the population will be those who are seventy or more years old, while those who range from twenty to sixty nine (where homes are still being bought) will shrink in total numbers. Seventy-plussers, whose total population is projected to quadruple during that time, buy the lowest number of homes of any age group (only about seven percent of the market). Not only do they have less need of a new home, there aren’t many banks that want to issue a thirty-year mortgage to someone who will be a hundred years old by the house it gets paid off. So, ask yourself who is going to buy up all the houses that the baby boomers evacuate when they move into retirement facilities? (The growth in nursing facilities, may keep construction going, but it isn’t going to help banks with huge numbers of home loans on their books, and boomers trying to sell in that market will be hurt badly by falling values, making it also hard to buy into retirement facilities.) Why the real-estate mogul president of the US may cause the housing bubble to collapse in 2017 It seems counter-intuitive that a real-estate development tycoon would cause a housing bubble collapse, as there is nothing he would hate more, but consider the following: While high-priced homes (prices and numbers of sales) are already starting to slide in some major metropolitan areas, Trump’s immigration restrictions are likely to impact the lower and mid segments of the housing market, pushing them over the cliff, too — particularly the multiple-family housing market and to some extent single-family housing. (I’m for many of his immigration reforms, but the math doesn’t care how you feel about immigration. Math is math.) The secondary reason — second only to having a cheap-labor pool — that businesses and government want as much immigration as possible is that high immigration forces expansion of our housing-based economy. And housing expansion seems to be the only sure way of growing an economy we know about — sure, that is, until it isn’t. Housing markets with the highest risk of an immigration-based collapse in 2017 include Los Angeles, San Francisco, Miami, Silicon Valley and New York, which have the largest populations of foreign renters and buyers. Since some of those areas are already hurting on the top end of the market, they are going to really feel the squeeze. Consider a simple reality of the deportation threat: even those who are not deported are likely to back off from their purchasing plans. More will stay for now with renting in fear that they may be deported. Overnight, millions of people are becoming reluctant to enter long-term residential plans. Not only do millions of families deported mean a loss in demand; they also mean millions of homes and apartments going on the market. It’s a price hit from both demand and supply sides of the market at the same time. In the old days, that was a recipe for a ghost town where people simply walked away. The possibility of deportation also makes lenders nervous and less willing to make loans to undocumented immigrants. (Some lenders actually specialize in making mortgages to “undocumented immigrants.”) For the bank’s view, people leaving the market and selling their homes in large numbers means oversupply, which predicts falling prices, which predicts mortgages going underwater. If those underwater mortgages are adjustable-rate mortgages they cannot be refinanced when the interest increase comes. So, defaults will rise for immigration reasons just as housing prices are exceeding the peek they hit before the last major housing crisis. Smart bankers are getting nervous, but that means loan tightening will exacerbate the problem. Then you have to factor in the millions of immigrants who won’t be coming even if deportation doesn’t happen quickly. That influx is already down because people know the risk of deportation is far more likely under Trump than it was under Obama. (Obama practically advertised for illegal immigration by letting the world know that children would not be deported, which translated to “send them quickly while you can get them in and can know they will be allowed to stay.”) The factor here is that a third of the real-estate industry’s estimated new growth is based on new immigrants adding to demand. Whether they live in apartments, houses or condos doesn’t matter. All of that is new construction for a planned influx of new people who are no longer coming. That is going to start taking some plans off the table. Many of those permits that have been applied for may never be exercised. While Trump’s massive immigration changes (and the fears caused by the knowledge that change is coming) are likely to effect the lower end of the market the most, they will effect mid levels as well. Immigrants with specialized skills, who are here with green cards to do specialized jobs, are becoming more skittish, too, being uncertain of how Trump’s immigration plans will effect them. Even some green-card holders who are already far along in the process of getting citizenship legally are becoming apprehensive about purchasing a home because they are concerned that the immigration issue could become more aggressive. So, we have a rather large trigger that is already moving, which could cause a 2017 housing bubble c0llapse. Canada’s housing bubble is more precarious and is already falling in 2017 From Miami, Florida, to Vancouver, B.C., housing is tumbling at the top. Vancouver’s housing market decapitation is partially intentional, created in part by a 15% foreign-investment tax that the city started at the end of summer in 2016. They implemented the tax because prices at the top were going insane due to Chinese investors, and that was pricing Canadians out of their own market; but that pushes somewhat wealthy Canadians down to high mid-level homes, raising prices there, which pushes mid-level buyers down and so forth. The 15% tax hits mansions the most because that is where foreign money was percolating prices into the stratosphere (due to Chinese investors looking for ways to store their wealth outside of badly failing China). However, the price drop in top-tier housing is not entirely due to the foreign-investor tax because sales started to fall sharply (by about half the number of units sold in a month, year on year) for two months before the new tax was voted into place. (Maybe just in anticipation?) In fact, the average home price in Vancouver has fallen almost every month since March, 2016, though most of the deflation has been at the top. (So, maybe a top is in anyway.) At the same time, the number of empty houses (including derelict mansions) in the greater Vancouver area had more than doubled from what it was back in 2001 even though prices since 2001 had risen 450%. So many empty houses means there is a lot of reason to believe prices will keep falling, especially now that the foreign investors are being driven away. Have incomes risen 450% to keep up with that? Don’t think so. Because mansions in the best neighborhoods (where the median home price is about $5 million Canadian) were oddly being left unoccupied and deteriorating, Vancouver also imposed a one-percent surcharge on property taxes for houses that are not primary residences or are not rented out for half of the year in hopes of getting people to do something with those home in order to thin out the decay. (The result of all this has been to push Chinese investment down to Seattle, Washington, causing the high-end home market along the US west coast to improve.) Toronto, Canada, is as much a bubble as Vancouver. Doug Porter, the chief economist for the Bank of Montreal, told investors this past week, “Let’s drop the pretense. The Toronto housing market and the many cities surrounding it are in a housing bubble.” Prices in that region have risen an average of 22% in just the last year. This is the fastest increase since the late eighties, which almost everyone in Canada will agree was another bubble, and it comes on top of pervious years of double-digit gains. This is insanely bubblicious activity. Did incomes rise 22% last year? Do the math: When the cost of housing rises 22% in one year, and wages rise 2% and when the 22% is on a starting number that is maybe four times higher than the average annual wage that only rose 2%, clearly there is no more room for housing prices to rise … other than by foreign investment (now being curtailed) or further relaxation of credit terms. (Lest you think the latter is a realistic possibility, think how much you’d have to slacken credit terms in just one year to make the next year’s mortgages affordable.) The housing bubble down under is probably going under in 2017, too Australia appears to be trying to push its bubble higher in all the same ways the US tried leading into the Great Recession. Why? Because the Australian housing bubble is coming to an end, and what one does when that happens is loosen the strings on the net to cast a wider net. Thus, one member of parliament is now asking for banks to start giving zer0-downpayment loans. Been there, done that in the US; and the housing market collapse came shortly after. When you have nothing down and little to lose, you walk away from your loan quite easily if housing prices fall. So, the end of the bubble comes surprisingly fast at the point. The Australian housing bubble percolated along nicely all the way through 2016 with housing prices in Sydney and Melbourne rising fifteen and thirteen percent respectively in one year. Canberra and Hobart saw about 10% growth in prices. In Brisbane, however, where construction was soaring, growth has almost stalled. Vacancy rates have now doubled. Project approvals are dropping, so construction will begin to go down. Perth was the first major city to shift into reverse as it saw property prices slide downhill four percent last year. Smaller cities where the big money was coming from mining of resources sold to China are seeing even faster declines. They are not ghost towns, but it is the same dynamic. One of the things the US experienced in its infamous housing bubble collapse was a lot of dishonesty in the loan approval process and the loan repackaging process that became necessary to expand the net after all possibilities of legally relaxing standards were exhausted. Now Australia is in the same place: UBS Securities Australia reported today that about 28% of Australian mortgages issued in 2015 and 2016 are what we in the US have come to call “liar loans,” which played a big role in the housing boom and the collapse and subsequent bailout of the global financial system. The last phase of a housing bubble needs liar loans to keep going because buyers have to reach beyond their limits, and the only way to do this is lie now, or miss out forever on buying a house to live in or get rich with quick as investor…. US-style mortgage fraud would be a “Nuclear Bomb” to Australia’s banks. (Wolf Street) Much of this fraud has come from Chinese investors who falsely stated their income. With the Chinese running double books in China as well-known standard operating procedure, who would have thought they might have provided false data to Ausie banks? Increasingly, Australian banks are afraid to lend to them, so Chinese investment is falling off sharply. Shanghai-based financiers claim their Chinese clients’ funding from Australian banks has been frozen and they face foreclosure – or usurious interest rates – from private financiers…. “All the deals have been frozen,” said Mark Yin, an agent with Shanghai-based Home Tree Group, about his Shanghai clients’ funding with Australian banks. “We are now looking for finance all over the world….” Billions of dollars has been invested in tens-of-thousands of high-rise apartments that are reshaping the skylines of the nation’s major capitals, particularly Melbourne, Sydney and Brisbane. Most have been sold off-the-plan, which means purchasers buy off the blueprint with a deposit and complete when it is built, which requires a second valuation and financing commitment by the lender…. Lenders, which initially fell over themselves to finance overseas’ buyers, slammed on the breaks when spot checks on the loan applications detected widespread fraud. The main problem is mainland Chinese buyers, which account for about half of the deals. That means many local lenders that agreed to provide funding when buyers made deposits, will not recommit upon completion. Nervous local lenders fear that a sharp downturn, or change of sentiment, could result in foreclosures with overseas borrowers they have little chance of locating. (Financial Review) According to UBS, misrepresentation is systemic, and according to The Guardian, the housing bubble in some parts of Australia is “ready to hit the skids.” With things falling apart, the Reserve Bank of Australia started trying to make Donald Trump the scapegoat for the failure of its own cheap-money policies … before he was even inaugurated. (Don’t they have their own notoriously irascible PM they could blame?) Trump’s policies may be inflationary, they whine. Wasn’t Australia’s central bank, like the rest of the civilized world, trying for the past several years to create a little inflation? Now their failures are because Trump is creating inflation? The problem is that Trump’s talk of infrasture spending raised bond rates in Australia, too, which bleeds into mortgage rates. Interest rates are now rising outside the central bank’s control, just as they are here in the US, sending housing expansion into reverse. Market forces are wresting control over interest from central banks, so CB decisions to raise target rates at this point don’t amount to much more than catching up in order to maintain the illusion that they are still in control. UBS also ranks Sydney as the fourth-most likely city in the world to experience the implosion of a housing bubble. (Vancouver tops the list.) Property prices there have grown almost fifty percent since 2012, while wages have stagnated. That assures it is a credit-fueled housing bubble, not a rise born of spreading prosperity. How bad is it? This Sydney house with its tiny sliver of land in a residential neighborhood sold for nearly $1 million in 2014. That bad. Jonathan Tepper — a US hedge-fund consultant who predicted the mortgage crises in the US, Spain and Ireland — claimed Sydney’s housing bubble was ready to burst in 2016 with a correction that could be as much as a fifty percent plunge. Stated Tepper, “Australia now has one of the biggest housing bubbles in history.” Was he wrong entirely about an Australian housing bubble crash or just a little premature on the timing? Some developers (with their own interests to promote) say Sydney cannot crash because Australia’s population is still growing rapidly and will for another twenty year, but Sydney could still crash if the rise in values has more to do with years of speculation than with population growth, as rental rates would indicate. Prices will revert to what people can actually afford when speculation can’t go higher. We know what happens as soon as speculative housing bubbles stop rising because they can’t find enough qualified fools (or enough cheap credit). Like all Ponzi schemes, the game is over immediately upon reaching the last tier of willing or able players. Where wages have stagnated for years, that happens as soon a speculators can no longer count on a profiting from reselling to other anxious speculators. Higher interest disqualifies more participants. As in the US, Australian households are again already struggling under a huge debt load of $2 trillion Ausie bucks. That means a little rise in interest should shut the game down pretty quickly. That crane count over the skyline of Australian cities, which has outnumbered major cities in the US and UK, may start to look a little derelict in the years ahead, as rusting cables sway in the wind over half-finished, vacant monuments. Stop! Don’t worry about that scenario right now. Individual banks in Australia have found a way to keep the investor pool growing even as central-bank cheap money has topped out — mortgage fraud. According to a report last spring, which was tabled by the Australian senate, many banks are falsifying applicant information in order to make applicants look more capable of paying than they really are. So, Australia is not just experience mortgage fraud from applicants, but also mortgage fraud from the banks making the loans. You have to appreciate how much the Ausies learned from the United States’ play book where many banks in Florida ran the same game in the run-up to the Great Recession. Australia should be safe, though, because, according to the report, this is happening “with the full knowledge of Australian Securities and Investments Commission, the Australian Prudential Regulation Authority and the Reserve Bank of Australia.” (One has to wonder why they became so concerned about Chinese falsification, when others are going out of their way to create false applications; but such is the bizarre world of housing bubbles, especially when they reach their popping point and things get desperate.) Philip Lowe, the Reserve Bank of Australia’s governor, tried last fall to blame skyrocketing home prices on a shortage of houses, rather than on the loosey-goosey interest rates of the national bank. Sorry, Pip, but if that were the case, rents would have risen parallel with housing prices; but rents have barely nudged upward for years. If there is a shortage of inventory, it’s only because you’re in a feeding frenzy of flippers, not because people can’t find enough shelter. It’s a speculative bubble, with everyone snapping up anything that flashes in the pond. Bite first, decide if its food-worthy later. The last person we would expect to understand housing bubbles is a banker. Stay with the bubbles in your champagne flute, Phil. They’re the only ones you’re familiar with. The real problem is that years of cheap loans have enticed your people to amass the highest levels of household debt in the world! Do I hear a flush coming? But, hey, at least the RBA has set aside $300 billion dollars for its next bailout. So, you’re good, Australia … until round two. All bets are on the house in this casino. Even ol’ Pip recognizes that one of the major reasons governments want immigrants is to keep pumping up the housing bubble. Lowe stooped to his name’s own level when he lamented last week that “the insidious” resentment that Ausies have toward immigrants, such resentment being caused by the overcrowding of Australia’s major cities. This could doom the land down under’s housing-based economy if people there start rejecting a major source of demand as is happening in the US. You see, the eternal expansion of overpopulation is essential when the only way to grow a housing economy is to grow population. The solution, according to Lowe, is for the government to build more transportation infrastructure so the influx of people can spread out more. (Hmm, you mean take out more bonds, which will cause interest rates to rise just as happened because of Trump’s infrastructure plans? I guess Lowe likes the idea if it happens in Australia, just not when it happens to Australia.) Hopefully, someday Australia will be one big city from coast to coast. Then they can start building islands (think how much infrastructure spending that will cause) to house more people in order to keep that real-estate-driven economy ever on the rise. (I ask the question, “Why do economies need to grow? What’s wrong with just sustaining nicely? Well, of course, they need to grow so that people can get filthy rich.) How long can the game go on? According to The Sydney Morning Herald, The forecasters are now saying 2017 will be the year that the housing headwinds could get stronger. But The Herald also states that none of this points to Australia’s housing bubble bursting, but just to a little letting of the air out of the market. Ah, the perfect world where the air hisses out like a lazy snake. The problem with Ponzi schemes, though, is that as soon as the air starts coming out, the snake bites, and the whole scheme collapses. In housing that plays out as flippers stopping their investment because they get scary-close to not making money anymore. Some even start to lose money. Demand plunges as soon as the flippers stop flipping, so housing prices fall. That means mortgages go underwater. All of that becomes a catastrophe when a nation has issued a huge number of variable-interest loans — as Australia has. When interest rise just as housing prices go down, owners cannot sell their way out of trouble as an escape hatch if they got in over their heads. The only way out is default. Even worse are interest-only loans where speculators qualify for much more than they can actually pay for with loans that require interest payments only until a set date when a balloon payment is due. The flipper plans to sell the house into a rising market and see a big profit before that impossible event hits. The home owner who plans to stay counts on being able to refi at a more attractive interest rate once he or she has built up equity due to rising values. If they can’t? Australia has half a trillion dollars worth of these loans outstanding, comprising more than fifty percent of residential term loans. Prices could just settle out if this wasn’t a speculative bubble of people buying and selling homes to make a quick buck in a rising market. But when prices have reached lofty heights largely because of rampant speculation, housing is likely to slide off a cliff when speculation stops and prices revert to what people can actually afford without all the baloney that pumped up the market. Housing bubbles ready to burst all over the world in 2017 The countries I’ve covered here are no different than many others. I could as easily write about the UK housing bubble, which began to unwind last year. Barclay’s is now offering 100% loan-to-value mortgages — an obvious latch-ditch kind of effort to prop things along to anyone who has seen these things fall apart in the past. As with Vancouver, Manhattan, and Miami, London’s pricier neighborhoods have seen a decline of ten percent in value in the past year. The Organization for Economic Co-operation and Development said at the start of this year that it now sees dangerous property bubbles in several of the world’s largest economies that risk a “massive” price collapse. It notes that New Zealand and Sweden are perched at even more precarious heights than the UK, Australia, Canada and the US. All of this accelerating insanity has to be a top coming in. One can hope all these bubbles deflate slowly, but our experience with major bubbles says they don’t just fade. As soon as there is no greater fool qualified to enter the market, housing balloons in the US, Canada and Australia will likely implode. Likewise, elsewhere. We have rebuilt almost exactly the same potential panic-inducing crisis that was just starting to show in 2006; only this collapse is likely to be global … all at the same time — probably starting this year and really falling apart next as contagion moves from nation to nation. To keep qualified investors coming into this Ponzi scheme for now, nations have reverted to relaxing credit standards and the US back to deregulating banks because that’s the only way to expand to the next larger tier of fools. Same old story as last time. We’re doing this because we are so addicted to the idea of a housing-based economy as the only way to go that we bullheadedly keep thinking it has no top limit to its expansion. We do this even though we have already experienced how quickly things go bad — very bad — when you reduce mortgage standards so much in order to rope the final round of people in. People go mad in herds, but only recover their senses one at a time, while voices of sanity pretty much talk to themselves. For right now, the stampede in stocks and housing is still on; so don’t worry: a collapse is nowhere in site. We are no closer to a meltdown in either market than Fukushima was after a thousand earthquakes and a tsunami. If you don’t believe me, ask a banker. Oops.
По данным ЦБ Австралии индекс делового доверия в стране в 4-м квартале снизился до 5 пунктов с 6 пунктов в 3-м квартале.
По данным ЦБ Австралии индекс делового доверия в стране в 4-м квартале снизился до 5 пунктов с 6 пунктов в 3-м квартале.
Австралия зафиксировала беспрецедентный спрос на синдицированные продажи облигаций с погашением в ноябре 2028 г., сообщает Bloomberg со ссылкой на Pacific Investment Management Co. (PIMCO).
Австралия зафиксировала беспрецедентный спрос на синдицированные продажи облигаций с погашением в ноябре 2028 г., сообщает Bloomberg со ссылкой на Pacific Investment Management Co. (PIMCO).
Индекс заработной платы, публикуемый Австралийским бюро статистики, в четвертом квартале вырос на 0,5%, что немного выше предыдущего значения 0,4%, однако совпало с прогнозом экономистов. В годовом исчислении индекс вырос на 1,9% как и ожидалось. Рост заработной платы в частном секторе остается на уровне + 0,4% кв / кв и + 1,8% г / г что, является самым медленным ростом с 1960 года. Индекс заработной платы -индикатор, оценивающий инфляцию стоимости рабочей силы и уровень спроса на нее. Резервный банк Австралии уделяет большое внимание этому показателю при принятии решения по процентной ставке. В целом, высокие показатели считаются позитивным фактором для австралийской валюты В отчете Бюро статистики Австралии отмечено, что, несмотря на положительные значения, рост зарплат остается на рекордно низком уровне. Ранее сегодня глава РБА Лоув заявил, что рост заработной платы достиг дна. "Проблема заключается в том, что медленный рост заработной платы не способствует росту потребления",- отметил г-н Лоув. Однако, несмотря не на что, домашние хозяйства достаточно хорошо справляются с высокой задолженность. Информационно-аналитический отдел TeleTrade Источник: FxTeam
For those wondering why despite global markets trading at all time highs, consumer spending has yet to show a substantial pick up, Reserve Bank of Australia governor Philip Lowe has some ideas. Speaking at the Asutralia-Canada Economic Leadership Forum, in which he provided various comaprisons between the Australian and Canadian economies and monetary policies, the central banker warned that, "there are some signs that debt levels are affecting household spending" and notes that "the household sector is coping reasonably well with the high levels of debt. But there are some signs that debt levels are affecting household spending." In Australia, the household sector is coping reasonably well with the high levels of debt. But there are some signs that debt levels are affecting household spending. In aggregate, households are carrying more debt than they have before and, at the same time, they are experiencing slower growth in their nominal incomes than they have for some decades. For many, this is a sobering combination. As a result, Lowe says that the RBA's latest forecasts "were prepared on the basis that growth in consumption was unlikely to run ahead of growth in household income over the next couple of years; in other words the household saving rate was likely to remain constant. This is a bit different from recent years, over which the saving rate had trended down slowly." He adds that "in relation to the risks from additional borrowing, it is possible that continuing rises in indebtedness, partly as a result of low interest rates, increase the fragility of household balance sheets. If so, then at some point in the future, households having decided that they had borrowed too much, might cut back consumption sharply, hurting the overall economy and employment. It is difficult to quantify this risk, but it is one that is difficult to ignore." In relation to the risks from additional borrowing, it is possible that continuing rises in indebtedness, partly as a result of low interest rates, increase the fragility of household balance sheets. If so, then at some point in the future, households having decided that they had borrowed too much, might cut back consumption sharply, hurting the overall economy and employment. It is difficult to quantify this risk, but it is one that is difficult to ignore. As I said, our focus is on the medium term, not just the next year or so. Lowe also looks at the interplay between rising inflation and wages and warns that while the central bank expects inflation to "gradually increase", a pick-up in wage growth is not imminent. In our risk management exercises, we have been seeking to balance the risks from having inflation low for a longer period against the risks from attempting to increase inflation more quickly, which would partly occur through encouraging more borrowing. If inflation is low for a long period of time, it is certainly possible that inflation expectations adjust, making it harder to achieve the objective. At the moment though, I don't see a particularly high risk of this in Australia. The recent lift in headline inflation is helpful here and most measures of inflation expectations are within the range seen over recent decades. We are both expecting inflation to increase, but only gradually so. In our case, we expect the disinflationary effects of the earlier decline in commodity prices and the competitive pressures in retailing to wane. Some pick-up in wages growth is also expected, although wage increases are likely to remain below average for some time yet. Our liaison with businesses does not suggest that a pick-up in wage growth is imminent, but nor does it suggest that a further slowing is in prospect. He also touched on the topic of rising housing prices, and how these are leading to greater household indebtedness: Another characteristic that we have in common is that at a time of strong demand from both residents and non-residents, there are challenges on the supply side. I understand that zoning is an issue in Canada, just as in Australia. In some parts of Australia, there has also been underinvestment in transport infrastructure, which has limited the supply of well-located land at a time when demand for such land has been growing quickly. The result is higher prices. We are also both experiencing large differences across the various sub-markets within our countries. The strength in housing markets in our major cities contrasts with marked weakness in the mining regions following the end of the mining investment boom (Graph 6). The increase in overall housing prices in both our countries has gone hand in hand with a further pick-up in household indebtedness (Graph 7). In both countries the ratio of household debt to income is at a record high, although the low level of interest rates means that the debt-servicing burdens are not that high at the moment. That said, we are confident that Mr. Lowe is glad that unlike the US, Australia does not have some $1.4 trillion in student loans, and rising at a rate of approximately $100 billion per year, weighing on the spending patterns of the broader population.
In this holiday-shortened week, attention will be on the US FOMC minutes, housing data and consumer confidence. There will be GDP, PMI and inflation releases across the Euro Area as well as the latest Greek Eurogroup meeting. Look for GDP and public finances data in the UK. In emerging markets, there are monetary policy meetings in Brazil, Colombia, Korea and Kazakhstan. Watch Fed minutes for more clarity on March FOMC The minutes of the February 1st FOMC meeting are likely to reveal that Fed officials have become increasingly constructive on the outlook for the economy. There will likely be a mention of the meaningful improvement in business and consumer sentiment surveys. The FOMC is also expected to note that the labor market is likely close to full employment and that signs of underutilization have diminished. Finally, there could be some mentions of concern over "external" developments. Any discussion about the Fed's balance sheet should also garner interest: recent comments from Fed officials suggest there being an increasing debate about the future of the Fed's balance sheet. Eurogroup meets on Greek economic adjustment program Grexit is back, though as a tail risk. If all three sides insist on their red lines, the logical outcome would be Grexit. While this would likely not be in the political interest of either Greece or the creditors, markets could become nervous as we approach the July maturities (€6bn excluding bills). There is also a high risk of a snap election which initially could be market negative, but ultimately lead to a more stable government. The week ahead in Emerging Markets There will be monetary policy meetings in Brazil, Colombia, Korea and Kazakhstan. Brazil’s BCB is expected to cut the Selic rate by 75bp. In other data In the US, focus is largely on the Feb FOMC Minutes. Also due are home sales data along with a wide range of Fed speakers currently on schedule. In the Eurozone, meaningful releases include consumer confidence and PMIs. In the UK, data about public sector finances and GDP is on deck. In Japan, the main data releases include trade balance and PMIs In Australia, we get RBA minutes for February along with wage price index and construction data. Nothing major due from New Zealand. A daily breakdown of key events from Deutsche Bank: To this week’s calendar now. With the US on holiday for President’s Day (and markets subsequently closed) the data this morning is reserved for Europe where we’ll get PPI in Germany and CBI selling prices data in the UK. Euro area consumer confidence data will also be released. Kicking things off on Tuesday will be Japan where we get the flash February manufacturing PMI. It’ll be all about the PMI’s in the European session too with flash manufacturing, services and composite readings all due. We’ll also get CPI in France and public sector net borrowing data in the UK. In the US we’ll also get the three flash PMI readings. In the Asia session on Wednesday the lone data release is property prices data in China. Over in Germany we’ve got the IFO survey results for February as well as preliminary Q4 GDP for the UK, along with the various growth components. The final January CPI figures for the Euro area will also be watched. In the US on Wednesday the lone data is January existing home sales, while we’ll also get the FOMC minutes from the January meeting. Thursday kicks off with more GDP data, this time the final January report in Germany while we’ll also get confidence indicators out of France. In the US data due includes initial jobless claims, FHFA house price index and Kansas City Fed’s manufacturing survey. There’s nothing of note in Europe on Friday while in the US we’ll get new home sales and the University of Michigan consumer sentiment reading. Away from the data the Fedspeak this week consists of Kashkari, Harker and Williams on Tuesday, Powell on Wednesday and Lockhart on Thursday. Another focus for markets will be today’s Eurogroup meeting where finance ministers are due to discuss Greece’s bailout situation. Also of note today is the House of Lords commencing a two-day debate on the draft law passed in the House of Commons with a vote due on Tuesday. BoE Governor Carney is also due to testify before UK Parliament on Tuesday. A tabular summary of key events courtesy of SocGen Finally, here is commentary from Goldman of all key US events, together with consensus estimates: Monday, February 20 President's Day. US markets are closed. Tuesday, February 21 08:50 AM Minneapolis Fed President Kashkari (FOMC voter) speaks:Minneapolis Fed President Neel Kashkari will give a speech on the US economy and the role of the Federal Reserve to the Financial Planning Association of Minnesota in Golden Valley, Minnesota. Audience Q&A is expected. 09:45 AM Markit Flash US Manufacturing PMI, February preliminary (consensus 55.2, last 55.0) 09:45 AM Markit Flash US Services PMI, February preliminary (consensus 55.8, last 55.6) 12:00 PM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will give a speech on the economic outlook at the Wharton School of the University of Pennsylvania. Audience and media Q&A is expected. 03:30 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams will give a presentation on economics to students at Boise State University. Wednesday, February 22 10:00 AM Existing home sales, January (GS +2.0%, consensus +0.9%, last -2.8%): We look for a 2.0% rebound in January existing homes sales, following last month’s 2.8% decline. Regional housing data released so far suggest sequential improvement in closed homes sales, consistent with the 1.6% rise in December pending homes sales (which represent contract signings). Existing homes sales annual revisions are also scheduled to be released. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report. 01:00 PM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will give a speech on the economic outlook and monetary policy at the Forecaster’s Club of New York’s luncheon at the Cornell Club in New York. Audience Q&A is expected. 02:00 PM FOMC Minutes from the January 31-February 1 meeting: The FOMC kept policy rates unchanged at its January meeting and made few revisions to its statement, which described the economy as expanding “at a moderate pace” and characterized job growth as “solid.” In the minutes, we will look for any hints about the timing of the next hike as well as any comments about the FOMC’s evolving expectations for fiscal policy under the new administration. Thursday, February 23 08:30 AM Initial jobless claims, week ended February 18 (GS 240k, consensus 241k, last 239k); Continuing jobless claims, week ended February 11 (consensus 2,065k, last 2,076k): We expect initial jobless claims to edge up by 1k to 240k. The ongoing improvement in jobless claims provides additional evidence of underlying improvement in the pace of layoffs, and we also note the year-to-date improvement in several energy-producing states. Accordingly, we expect the pace of layoffs to remain low. 09:00 AM FHFA house price index, December (last +0.5%): The FHFA house price index has a wider geographic coverage than the S&P/Case-Shiller home price index, but is based only on properties financed with conforming mortgages. On a year-over-year basis, FHFA home prices rose at a 6.1% pace in November. 11:00 AM Kansas City Fed manufacturing index, February (last +9) Friday, February 24 08:35 AM Atlanta Fed President Lockhart (FOMC non-voter) speaks: Atlanta Federal President Dennis Lockhart will speak on his tenure at the Fed during the bank’s 2017 Banking Outlook Conference. President Lockhart will be officially leaving his post on February 28. 10:00 AM New home sales, January (GS +9.5%, consensus +6.5%, last -10.4%): We expect new home sales to rebound 9.5% in January, mostly reversing a 10.4% drop last month that we believe was partially driven by unseasonably high snowfall in the Midwest. We expect a favorable fundamental backdrop and the elevated level of single-family building permits to mitigate the negative impact of higher mortgage rates on new homes sales activity. 10:00 AM University of Michigan consumer sentiment, February final (GS 96.2, consensus 96.0, last 95.7): We expect the University of Michigan consumer sentiment index to rebound 0.5pt to 96.2 in the February final estimate, reflecting improvement among more timely measures of consumer confidence as well as the favorable stock market performance over the last two weeks. The University of Michigan’s survey of 5- to 10-year ahead inflation expectations fell 0.1pp to 2.5% in the preliminary February reading but remains above the record low of 2.3% in December. We expect this measure to remain stable or edge up in the final reading. Source: BofA, DB, SocGen, GS
Влияние на рынок:3Devata TsengПара AUD/USD демонстрировала бычью динамику с начала января в результате снижения доллара и отскока цен на сырье. Осси показал наиболее существенную производительность с начала года.Резервный Банк Австралии (РБА) анонсировал сохранение ставок на неизменном минимуме 1.5%.Седьмого февраля в ЦБ заявили о том, что ставки могут остаться прежними в краткосрочной перспективе.Текущий курс все еще выше важного краткосрочного уровня поддержки в тренде на рост.Тем не менее, пара снижалась 16 и 17 февраля после тестирования важного среднесрочного уровня сопротивления на 0.7700.Зона среднесрочного сопротивления находится между 0.7710 – 0.7800, где давление распродаж достаточно сильно, следует помнить, что попытки роста в этой зоне, вероятно, будут сдержаны. На четырехчасовом графике SMA (10) пересекает SMA (20) сверху вниз, указывая на ослабление бычьего импульса. Линии Стохастика пересекаются вверху на дневном графике, указывая на снижение. Уровень сопротивления находится на 0.7685, следом идут 0.7700 и 0.7720. Уровень поддержки находится на 0.7660, следом идут 0.7640 и 0.7620. Резервный Банк Австралии (РБА) опубликует протокол заседания в 00:30 GMT во вторник 21 февраля следом за выступлением председателя РБА Лоу в 21:30 GMT. Следите за протоколом и выступлением, так как они, вероятно, окажут влияние на курс осси. По США данные менеджеров по закупкам за февраль будут опубликованы в 14:45 GMT во вторник (21 февраля), включая данные от Markit в сфере промышленности, услуг и составные PMI. Если данные окажутся лучше прогнозов, вероятно, это окажется давление на пару AUD/USD, и она протестирует уровни поддержки. Если данные окажутся слабее прогнозов, тогда это толкнет пару AUD/USD и приведет к тестированию уровней сопротивления.Статья взята с Блога FxPro - http://blog.fxpro.ru/market-snapshots/20022017-aud-usd-blizka-k-vazhnoy-srednesrochnoy-zone-soprotivleniya/ ..Источник: FxTeam
AUD/USD has turned bullish since early January, as a result of the retracement of the dollar and the rebound of commodity prices. The Aussie has been one of the best currency performers year to date. The Reserve Bank of Australia (RBA) announced the rates remain unchanged at a record low of 1.5% On 7th Feb, implying the rates would remain on hold in the short term. The current price is still trading above the downside near- term major uptrend line support. However, the price has retraced on 16th and 17th Feb, after testing the mid-term major resistance level at 0.7700. The mid-term major resistance zone lies between 0.7720 – 0.7800, where the selling pressure is heavy, be aware that the bullish attempt is likely to be restrained at this zone. On the 4-hourly chart, the 10 SMA is crossing over the 20 SMA downward, suggesting waned bullish momentum. The daily Stochastic Oscillator is crossing over from above, suggesting a pullback. The resistance level is at 0.7685, followed by 0.7700 and 0.7720. The support line is at 0.7660, followed by 0.7640 and 0.7620. The Reserve Bank of Australia (RBA) will release the meeting minutes at 00:30 GMT on Tuesday 21st, followed by RBA’s Governor Phillipe Lowe’s speech at 21:30 GMT. Keep an eye on the content of the minutes and the speech, as it will likely influence the strength of the Aussie. The US PMI figures for Feb, will be released at 14:45 GMT this Tuesday (Feb 21), including Markit Manufacturing, Services and Composite PMIs. It will likely influence the strength of the dollar and the dollar crosses. With better-than-expected numbers, it will likely weigh on AUD/USD and test supports. With lower-than-expected numbers, it will likely push AUD/USD up and test resistances.
Частный долг австралийцев взлетел до 187% их доходов, причём он вырос резко, с около70% в начале 1990-х. Уровень безработицы растёт второй подряд месяц, в декабре на 5,8%, как никогда высока неполная занятость и количество рабочих, желающих иметь больше рабочих часов. Рост зарплат рекордно низок.
В пятницу вечером МВФ опубликовал свою статью-доклад о Австралии, в которой рекомендовал стране сохранить денежно-кредитную политику мягкой. Более того, фонд считает, что Резервный банк Австралии должен сократить свою учетную ставку в течение следующих шести месяцев до 0.75%. «Чтобы избежать ловушки низкой инфляции и низких темпов роста ВВП, требуется меньшая учетная ставка. Мы более пессимистичны относительно перспектив экономического роста в Австралии, нежели РБА» - заявили в МВФ. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Next week’s main event will be Yellen’s Humphrey HAWKins (as RBC bluntly put it) testimony in Congress starting on Valentine's Day in the House and continuing into Wednesday. According to Bank of America, the market is underpricing the risk of a March hike. The bank's reasoning is that based on the view that with market pricing around 25% chance of a rate rise, Yellen may be tempted to try and increase those probabilities to close to 50% and make March live. As BofA's Ralf Preusser adds, it is hard to see how Yellen can deliver a message that is more dovish than what the market is already pricing. Bloomberg's Vincent Cignarella echoes the sentiment, writing that the dollar rally will also likely gain further momentum from Yellen’s testimony next week if the Chair leans hawkish, adding that That would probably raise the probability of a March rate hike closer to 50% from current odds of about 30%. Recently BlackRock Inc.’s Rick Reider said a March rate hike “is on the table,” given the Fed is close to its dual mandate on employment and inflation with the U.S. economy expanding. Additionally, what’s sandwiched between Janet Yellen’s congressional testimony may prove to be just as important for currency and bond markets and may prove to be the "tiebreaker" when it comes to keeping the Trump reflation trade afloat according to the Bloomberg FX strategist. Even after President Donald Trump’s promise of a “phenomenal” tax plan helped send the dollar to its first weekly gain since December and triggered a resumption of risk-on sentiment, doubts remain over whether growth is strong enough for the Federal Reserve to tighten as much as has forecast for this year. Trump’s pledge that his tax plan would come in two-to-three weeks lines up around when the so-called State of the Union address would likely take place, giving the former reality TV star a possible automatic prime-time national platform. That may be enough to maintain the dollar optimism in the meantime. However, what’s sandwiched between Janet Yellen’s congressional testimony may prove to be just as important for currency and bond markets, and may be the tie-breaker when it comes to keeping the Trump reflation trade afloat. The one thing everyone should be keeping an eye on is the release of January inflation data on Wednesday between Yellen’s appearances before the House of Representatives and the Senate. While the Fed prefers to watch an index tied to purchases, the growing rate of consumer inflation and its erosion of disposable income by way of declining real household earnings is becoming hard to ignore. The CPI headline number has risen from below 0.5 percent in September of 2015 to a January forecast of 2.4 percent. That said, keep in mind that the bulk of the rise has been due to the anniversary of the "base effect" of gasoline prices, as well as surging rents. As the following CLSA chart shows, ex-shelter costs, core CPI is actually fading. What does all this mean for the dollar? Here Cignarella says that the greenback as measured by the Bloomberg Dollar Spot Index closed above 1237.47, a mean reversion resistance. A sustained move above that level would likely see the dollar trade higher toward second reversion resistance at 1268.40. The revival of the reflation trade and a response by the Fed that mirrors the central bank’s so-called dot plot for three rate hikes this year will likely set the tone for a long and sustained dollar rally. "Finally a trend impatient traders can bank on." Here is what else to watch this week: In the US, the focus will be on Chair Yellen’s Humphrey Hawkins testimony, but we also get inflation data, retail sales, industrial production, housing starts, Philly Fed, TIC data and several Fed speakers. In the Eurozone, we get the second estimate of GDP, industrial production, and the German ZEW as well as the ECB minutes. The UK data calendar is full of important data releases, namely inflation, labor market data and retail sales. A light data week for Japan, with GDP the only release of note. In Australia, the main focus will be on the labor market report, while we also get business and consumer sentiment and a speech from RBA’s Heath. New Zealand retail sales and Manufacturing PMI also coming up. In the Scandies, focus this week will be squarely on Sweden, where we get the Riksbank meeting and several central bank speakers, as well as unemployment, inflation and inflation expectations. By contrast a quiet week for Norway with Norges Bank Governor Olsen’s annual address the only main highlight. Little on the calendar in Canada, other than manufacturing and existing home sales. In Switzerland, focus will be on inflation data. A summary of key US events: And global:
Резервный банк Австралии: Существует значительная неопределенность по поводу экономической политики Трампа
Протекционистская политика США может повредить росту мировой экономики Налогово-бюджетное стимулирование Трампа ускорит инфляцию в США, а рост инфляции и ВВП в США затронет и другие экономики мира Ожидается рост ВВП Австралии на 3% г/г в 2017 году и на 3,25% г/г в 2018 году Уровень безработицы останется на уровне 5-6% к 2019 году Инфляция и базовая инфляция в Австралии вернется в диапазон 2-3% к середине 2019 года Мировая экономика начала 2017 год с более высоких показателей Экономика Китая сильнее, чем ожидалось, но она все равно ее темпы замедлятся из-за высокого объемы госдолга Высокие цены на железную руду и уголь, вероятно, не будут устойчивыми, что приведет к росту инвестиций Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Частный долг Австралии вырос до 187% от уровня доходов, тогда как в начале 1990-х гг. долг составлял 70%. В декабре 2016 г. уровень безработицы в Австралии вырос второй месяц подряд до 5,8%, кроме того, частичная безработица близка к рекордно высокому уровню, а рост заработной платы - на самом низком уровне за всю историю. В Австралии также наблюдается крупнейший в мире пузырь на рынке недвижимости, в некоторых частях страны отмечается сильное ценовое давление. В скором времени, по мнению аналитиков, страна столкнется с серьезными проблемами. Резервный банк Австралии постоянно пытается разглядеть улучшения в экономике, но в скором времени ему может понадобиться помощь долговых консультантов. Кроме того, в Австралии наблюдается высокий уровень задолженности по ипотеке, который оценивается в $1 трлн. Росту частного долга в Австралии способствовали низкие процентные ставки. Домовладельцы, потребители и инвесторы в недвижимость по всей Австралии делают больше звонков финансовым службам помощи, поскольку задолженности по ипотеке ползут вверх, вместе с тем количество личных банкротств находится вблизи рекордно высокого уровня. Но даже в этой ситуации издание Financial Review советует не паниковать, поскольку потери банков по-прежнему остаются небольшими по историческим меркам и в значительной степени ограничиваются горнодобывающими районами, по данным PwC.(http://www.vestifinance.r...)
Asian stocks hit their highest level in 18 months, with positive momentum lifting European shares which were helped by Societe Generale earnings. Yields fell on some of the euro zone's battered low-rated bonds as investors put aside the political risks that have dominated markets this week. After trading flat, S&P futures bounced as US traders walked boosted by a spike in the USDJPY, ahead of earnings reports from Coca-Cola, Reynolds American, CVS Health, Nvidia and Twitter. Rising oil prices pushed energy company shares higher in Europe on a busy day of corporate earnings while Asian stocks hit their highest in one and a half years. "The stabilization of the oil price after its recent wobbles, together with solid earnings, for example, Soc Gen today, is driving the positive sentiment," said Andy Sullivan, portfolio manager with GL Asset Management UK in London. The Euro STOXX 600 index rose 0.4 percent. Bank shares also rose after French lender Societe Generale reported lower fourth-quarter net income that nonetheless beat analysts forecasts. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent to their highest since July 2015 with Hong Kong, Taiwan and China among the region's best performing markets. Japanese shares, however, fell 0.5 percent, hit by earlier yen strength the day before Japan's Prime Minister Shinzo Abe meets U.S. President Donald Trump. "We have some relief with investors shrugging off some of their concerns with a feeling that things went too far, too fast," said Martin Van Vliet, senior rates strategist at ING. With much attention recently on global rates, yields on Spanish and Italian 10-year government bonds fell. Earlier this week, concern over the impact of elections this year in countries including France and Germany saw investors sell bonds of lower-rated euro zone countries. Spanish 10-year yields fell 4 basis points to 1.66 percent while Italian equivalents fell 3 bps to 2.2 percent. French yields dipped 1 bps to 1.01 percent. The premium investors demand to hold French rather than German debt hit its highest in four years on Wednesday, three months before the final round of a presidential election expected to include far-right, anti-euro candidate Marine Le Pen. Yields on German 10-year bonds, seen as among the world's safest assets, rose 0.5 bps to 0.31 percent. In addition to political worries, bond investors are contemplating the impact of the ECB eventually winding down its bond-buying stimulus scheme, which has driven down borrowing costs in the bloc for the past two years. ECB President Mario Draghi and German Chancellor Angela Merkel, bidding for re-election later this year, meet on Thursday. A number of German officials have called on the ECB to unwind its monetary stimulus. The euro steadied just below $1.07 after falling on Wednesday to a two-week low of $1.0640. The yen fell 0.3 percent to 112.39 per dollar, having earlier traded as strong as 111.70. The dollar index was unchanged. In the US, 10Y yields fell to their lowest since mid-January on Wednesday as investors re-assess how many interest rate rises can be expected from the Federal Reserve and look for clarity over whether Trump will make good on his campaign pledges for tax cuts and infrastructure spending. Ten-year Treasuries yielded 2.36% in European trade on Thursday, up 1.2 bps. Oil prices rose after an unexpected draw down in U.S. gasoline inventories. Brent crude, the international benchmark, rose 51 cents a barrel, or 0.9 percent, to $55.63. In a sign that political risks are still on the radar, gold held close to three-month highs touched on Wednesday. Spot gold rose 0.1 percent to $1,243 an ounce, compared with from Wednesday's high of $1,244.67. Bulletin Headline Summary from RanSquawk Major European indices trade positively this morning and general sentiment leans toward risk on The USD continues to trade in limbo, and while traders continue to look across the spectrum of major counterparts, we see there is reluctance to reinstate the US reflation trade, with USD/JPY notably restricted Highlights include Initial Jobless Claims, Speakers include: BoE Govenor Carney, Feds Evans, and Feds Bullard Market Snapshot S&P 500 futures up 0.2% to 2,295 Brent Futures up 0.9% to $55.62/bbl Gold spot up 0.1% to $1,243.30 U.S. Dollar Index down 0.2% to 100.12 STOXX Europe 600 up 0.3% to 364.95 German 10Y yield rose 1.2 bps to 0.308% Euro up 0.07% to 1.0705 per US$ Brent Futures up 0.9% to $55.62/bbl Italian 10Y yield fell 12.1 bps to 2.246% Spanish 10Y yield fell 6.7 bps to 1.629% MXAP down 0.2% to 143.03 MXAPJ up 0.4% to 459.43 Nikkei down 0.5% to 18,907.67 Topix down 0.7% to 1,513.55 Hang Seng Index up 0.2% to 23,525.14 Shanghai Composite up 0.5% to 3,183.18 Sensex up 0.1% to 28,330.91 Australia S&P/ASX 200 up 0.2% to 5,664.62 Kospi up 0.04% to 2,065.88 Top BBG News Anthem Inc.’s $48 billion deal to buy Cigna Corp. was blocked by a federal judge, putting an end to the second of two massive mergers that would have reshaped the U.S. health-care landscape Deutsche Bank AG is shutting down its U.S. swaps-clearing business as part of an overhaul of its investment bank to improve profitability, according to a person briefed on the decision The Senate confirmed one of its own, Jeff Sessions, as attorney general after more than a day of contentious debate that took an unusual turn when Republicans silenced Democratic Senator Elizabeth Warren President Donald Trump is injecting himself into the daily business of U.S. companies to an unprecedented extent, spurring investors and executives to weigh their exposure to his wrath when making decisions SoftBank Group Corp. is aiming to close the first round of investment in its planned $100 billion technology fund by the end of this month, giving Chief Executive Officer Masayoshi Son an enormous war chest to go on the hunt for deals, according to people familiar with the matter Boeing Co. is the front-runner as Singapore Airlines Ltd. closes in on an order for at least 35 wide-body aircraft amid a battle with Chinese and Middle Eastern carriers, people familiar with the matter said The global oil market’s march to equilibrium won’t be deterred by the increasing volume of crude being poured into U.S. storage tanks, according to Goldman Sachs Group Inc. Asia equity markets continued its recent choppy trade following a mixed lead from the US where stocks closed mostly higher, although the DJIA underperformed amid weakness in financials. ASX 200 (+0.2%) pared opening losses and finished marginally higher as gains in defensive stocks overshadowed weakness in mining names, while Nikkei 225 (-0.5%) was dampened by recent JPY strength although the index finished off worse levels alongside a recovery in USD/JPY. Chinese markets ignored the absence of a PBoC's liquidity injection for the 5th consecutive day as Shanghai Comp. (+0.5%) and Hang Seng (+0.1%) traded positive with the latter led by financials and gambling names. 10yr JGBs were uneventful with prices relatively flat throughout the session, while today's 30yr JGB auction failed to inspire as b/c, prices and the tail-in price deteriorated from the prior month. PBoC refrained from open markets operations for the 5th consecutive day due to high liquidity conditions, which brings the total amount of funds drained so far this week to CNY 715bn. Top Asia News Nissan Operating Profit Falls 15% on Rise in U.S. Incentives Philippines Holds Benchmark Rate as Inflation Pressure Mounts China Car Sales Decline 9.8% After Tax Increase, Lunar New Year China H Shares Rally to 14-Month High as Autos, Financials Climb Banks in Some Chinese Cities Said to Increase Mortgage Rates MTN Close to Buying Stake in Iranian State Internet Provider India’s Jan. Passenger Vehicle Sales Rise 14.4% to 265,320 Units In Europe this morning, major indices trade positively and general sentiment leans toward risk on. In terms of sectors, healthcare is the best performing up 1.1% with materials retracing some of yesterday's gains. Energy names started off on the front foot after Total posted a strong set of results better than those seen by BP earlier on in the week and in the financial sector Commerzbank also reported well but subsequently shares have fallen and are now trading lower by around 3%. In Fixed income markets, UST are in demand due to geopolitical risks hitting the belly with 5YR yield eyeing 180bps and 10 YR yield struggling around 235bps. German paper still in demand due to the internal EU demand away from periphery. Interestingly the GE/FR spread has tightened to 66bps a move of 14bps over the last two day. In terms of this morning's Gilt auction, the line provided a solid bid/cover and smaller tail than previous, although failed to sway Gilts. Top European News SocGen Posts Net That Tops Estimates, Plans Car-Leasing IPO Mediobanca Rises After Second-Quarter Profit Almost Doubles MiFID II Market-Rule Overhaul Faces Crucial Parliament Vote HSBC Said to Seek Wealth Management Asset Acquisitions This Year Bank of Tokyo-Mitsubishi Fined by U.K. for Failing to Be Open Draghi Meets Merkel as Populist Concerns Trump ECB Criticism In currencies, the USD continues to trade in limbo, and while traders continue to look across the spectrum of major counterparts, we see there is reluctance to reinstate the US reflation trade, with USDJPY notably restricted. As such, geopolitical risk dominates, and the lead (risk on) trade maintains a tight range below 112.50. EURUSD has also managed to brush off the EU wide political risks weighing on the single unit. This comes with the Bund spreads (with France) narrowing, but through 1.0700, we are seeing plenty of supply coming in with initial resistance at 1.0715-20 holding. The big move in Asia was NZD on the back of the exchange rate related comments from the central bank, but after a series of losses which saw 0.7200 eventually taken out, we have seen some moderation since as the USD continues to flounder. Comments from RBA gov Lowe was a little more non committal on the AUD exchange rate, saying it is hard to say whether the AUD is overvalued or not, and this gave the spot rate some support and saw a modest, but tentative move higher through 0.7650. Some modest outperformance in GBP, as EURGBP is pressed back down to 0.8500, and given the above flow, Cable through 1.2550. Resistance in the latter seen ahead of 1.2600, allies with real money and tech based demand in the cross rate below the above mentioned figure level. In commodities, oil rose 1.2 percent to $52.94 per barrel. The global oil market’s march to equilibrium won’t be deterred by the increasing volume of crude being poured into U.S. storage tanks, according to Goldman Sachs. Copper three-month forwards fell 0.4 percent. The metal jumped 1.7 percent Wednesday after workers at the biggest mine in Chile vowed to strike. Goldman Sachs Group Inc. forecast what would be the first deficit of the metal since 2011. Gold was flat at $1,241.93 an ounce, after touching the highest level since November on Wednesday. Oil prices are back to the fore as the significant rise in inventory (Cushing) caused a moderate sell off in WTI in relative terms, with the latest rise potentially signalling the longer term impacts of the OPEC agreements on supply made last year. WTI tested towards USD53.00 earlier today, but this just puts us back into the middle of the near term range. Natural Gas higher though due to US seasonal factors. Elsewhere, base and precious metals all modestly higher in response to USD caution. Looking at the day ahead, the calendar continues to remain fairly sparse for the most part today. The highlight this morning in Europe is likely to be the December trade data in Germany, where exports declined by -3.3%, well below the -1.10% expected (down from +3.9%) while over in the US the only data of note is the latest weekly initial jobless claims reading and the December wholesale trade and inventories report. Away from the data we are due to hear from the Fed’s Bullard and the Fed’s Evans. BoE Governor Carney is also scheduled to speak in London this evening at 6.30pm GMT. Finally on the earnings front we’ve got 27 S&P 500 companies due to report including Coca-Cola and CVS Health Corp. US Event Calendar 8:30am: Initial Jobless Claims, est. 249,000, prior 246,000; Continuing Claims, est. 2.06m, prior 2.06m 9:05am: Fed’s Bullard Speaks in St. Louis9:45am: Bloomberg Consumer Comfort, prior 46.6 10am: Wholesale Trade Sales MoM, prior 0.4%; Wholesale Inventories MoM, est. 1.0%, prior 1.0% 10am: Freddie Mac mortgage rates 10:30am: EIA natural-gas storage change 12pm: Monthly World Agriculture Supply and Demand Estimates 1:10pm: Fed’s Evans Speaks on Economy and Policy in Chicago DB's Jim Reid concludes the overnight wrap Yesterday saw a big rally in global bonds especially in the European periphery and France. Indeed 10y OAT’s finished the day 10.8bps lower in yield at 0.998%, the strongest day in fact since September 2015. In the periphery we also saw yields in Italy (-11.7bps), Spain (-7.2bps) and Portugal (-12.8bps) finish sharply lower while 10y Bunds (-5.5bps) – while underperforming – closed below 0.300% for the first time since January 10th. That meant the OAT-Bund spread eased back to 71bps from the recent 77bps wide mark. The rally really kicked into the gear straight from the open and steadily continued over much of the session. While much of the suggestion was that it was just an unwinding of some of the recent selloff, boosted also by strong auction demand in Germany and Portugal, there was a story also doing the rounds on Bloomberg concerning an internal ECB meeting in which Draghi supposedly said that he sees the ECB maintaining an accommodative policy until the end of his mandate in 2019. Given the imminent taper is a big part of the recent sovereign underperformance then one can see why markets responded to this. The positive momentum for bonds kicked on into the US session too and we saw 10y Treasury yields end the day 5.7bps lower at 2.336%, despite a temporary move higher following a soft 10y auction which seemed to be overshadowed by comments from Larry Fink after he said that there’s a rising chance of 10y yields going back below 2% given that fiscal stimulus policies won’t be in place until 2018. Yesterday’s closing level means Treasury yields are nearly 13bps lower this week alone and are only just above the YTD low made intraday on the 17th January of 2.306%. Yields have also fallen for 4 days in a row now which is the longest run since June last year. So while it was a busy day for bonds, it was once again another indifferent session for risk assets. In Europe the Stoxx 600 edged up +0.33%, meaning it is pretty much back to flat for the week, while European Banks (-0.77%) lagged with the move lower for bond yields. Meanwhile at the closing bell last night the S&P 500 finished +0.07%. Incredibly that’s yet another day where the index has moved up or down by less than 0.10%, taking the tally to 7 in the last 10 sessions. That isn’t the only remarkable stat however. Yesterday’s move means the index has now gone 82 sessions without falling more than 1% which is the longest streak since 2006. In addition, the index has now also gone 37 days in a row with an intraday range of less than 1% - the longest run that we can find. Needless to say then that equity vol stayed low again yesterday with the VIX at 11.45 (versus the 10.58 low at the end of January) and the VSTOXX at 16.83 (versus the recent low of 14.60). It was a similar story in credit too with the iTraxx Main just 0.5bps tighter despite the big moves in bonds, while CDX IG finished just over 1bp wider. This morning in Asia we’ve seen a continuation of the bond rally for the most part. The most notable have been the moves for 10y yields in Australia (-5.6bps) and New Zealand (-9.5bps) with the latter outperforming after the RBNZ left rates on hold and the associated statement said that monetary policy would remain accommodative for some time. JGB’s are little changed but we’ve also seen yields fall in Hong Kong (-3.7bps), South Korea (-2.5pbs) and Singapore (-2.5bps). The Greenback is little changed as we go to print, as is Gold and Oil, while it’s been another fairly uninspiring session for risk assets. The Nikkei (-0.28%) and ASX (-0.11%) are a shade lower while the Hang Seng (+0.39%), Shanghai Comp (+0.37%) and Kospi (+0.20%) are up. Truth be told there really wasn’t a great deal more that was interesting yesterday. Last night we got confirmation that MP’s in the House of Commons had voted overwhelmingly in favour of a draft law to trigger Article 50 by 494 votes to 122. The legislation now moves on to the House of Lords for further scrutiny with the FT highlighting that the peers are under big pressure to approve without any amendments. Staying in Europe, yesterday we also got another political poll out of France, which largely confirmed some of the recent trends. The Elabe poll for BFMTV showed Le Pen coming out on top in the first round at 25.5-26% versus 22-23.5% for Macron, 17-18% for Fillon and 15-15.5% for Hamon. A second round vote between Le Pen and Macron had Macron coming out on top at 63% to 37% and a vote between Le Pen and Fillon showed the latter coming out on top at 56% to 44%. Looking at the day ahead, the calendar continues to remain fairly sparse for the most part today. The highlight this morning in Europe is likely to be the December trade data in Germany while over in the US this afternoon the only data of note is the latest weekly initial jobless claims reading and the December wholesale trade and inventories report. Away from the data we are due to hear from the Fed’s Bullard at 2.05pm GMT and then the Fed’s Evans at 6.10pm GMT. BoE Governor Carney is also scheduled to speak in London this evening at 6.30pm GMT. Finally on the earnings front we’ve got 27 S&P 500 companies due to report including Coca-Cola and CVS Health Corp.
Wednesday 8th Feb, at 20:00 GMT, the Reserve Bank of New Zealand (RBNZ) announced the Interest rates remain unchanged at a record low of 1.75%, in line with expectations. The RBNZ adopted a dovish outlook, forecasting the rates will remain at this level until June 2019, tempered by global uncertainty. The statement for the year implies no further rate cuts and rate hikes in the following two years or longer. The RBNZ’s dovish statement follows the Reserve Bank of Australia (RBA) announcement which was made two days ago. NZD/USD has remained bullish since the beginning of this year, trading along the downside uptrend line support. However, since early February, the bullish momentum has waned. On the 4 hourly chart, the level at 0.7300 was broken by a long bearish candle on 8th Feb. The level has turned into the near term major resistance. After the RBNZ announcement, NZD/USD plunged to a two-week low of 0.7190. It is currently testing the key support line at 0.7200. On the 4 hourly chart, the Stochastic Oscillator is below 20, suggesting a rebound. However, the price is trading below both the long term and the short term moving averages, indicating upside pressure is heavy. The resistance level is at 0.7225, followed by 0.7245 and 0.7270. The support line is at 0.7200, followed by 0.7170 and 0.7150.
Submitted by Mike Shedlock via MishTalk.com, Australians’ private debt has soared to 187 per cent of their income. Debt is up from about 70 per cent in the early 1990s. The jobless rate rose for the second straight month in December to 5.8 per cent, and underemployment, the number of workers wanting more hours, is near an all-time high. Wage growth is the lowest on record. Australia has one of the world’s biggest property bubbles. In some sections of the country, prices are already under severe price pressure. The entire country will soon face that problem, at least in my opinion. The Financial Review reports There’s $1 trillion of Australian Mortgages and Some Now Worry of What’s Next The Reserve Bank of Australia frequently seeks feedback on the health of the economy. It might want to call the debt counsellors soon. Homeowners, consumers and property investors around Australia are making more calls to financial helplines as three warning signs back up the spike in demand: mortgage arrears are creeping up, lenders’ bad debt provisions have increased and personal insolvencies are near an all-time high. “It’s steadily out of control — I don’t know of too many financial counselling services where demand doesn’t exceed supply,” said Fiona Guthrie, chief executive officer of Financial Counselling Australia, who says the biggest increase in calls is from people suffering mortgage stress. “There are more people who have got mortgages that they can’t afford to pay.” Australia’s households are among the world’s most-indebted after bingeing on more than $1 trillion of mortgages amid a housing boom that’s fizzled out in parts of the country, but still roaring in Sydney and Melbourne. RBA governor Philip Lowe places financial stability at the forefront of monetary policy. The concerns are understandable. Australians’ private debt has soared to 187 per cent of their income, from about 70 per cent in the early 1990s, encouraged by low interest rates. In a November speech, Lowe said that while most households are managing these levels of debt, many feel they are closer to their borrowing capacity than they once were. Knocking out the wind “There’s so much household debt that a couple of rate hikes here would completely knock the wind out of the housing market, and a lot of people would be impacted by it,” said Gareth Aird, economist at Commonwealth Bank of Australia, the nation’s largest lender. That’s partly why he doesn’t think the RBA will lift rates until 2018 at the earliest. Lenders are watching these indicators as closely as the RBA. After a seven year bull-run, annual cash earnings at Australia’s big four banks fell last year for the first time since the financial crisis, said PricewaterhouseCoopers. At the same time, their bad debt expenses – which encompass both business and consumer lending – jumped 39 per cent to $5.1 billion, the highest since 2012. But the hardest indicator to track may be borrowers worried about making their next repayment. Counsellors at the National Debt Helpline deal with such problems and are now even getting calls from property investors, said Guthrie. In the last quarter of 2016, phone calls to the service jumped 12 per cent on the previous year to an average 11,079 per month, she said. That’s double the rate of increase of the same period a year earlier. Time to panic? It’s not time to panic. Banks’ losses still remain small by historical standards and are largely confined to mining areas, according to PwC. Some 77 per cent of customers at Commonwealth Bank were ahead on their mortgage payments as at June; the lender is likely to update those figures next week. The RBA also noted in November that borrowers have set aside funds tied to their mortgages equivalent to 17 per cent of outstanding balances. Key Phrase: “Not Time To Panic” When credit stress starts, and central banks and media analysts say "it's not time to panic", it's likely a fine time to panic. — Mike Mish Shedlock (@MishGEA) February 8, 2017 The #1 rule of panic is simple: Panic before everyone else does. Those thinking of buying a house in Australia now are out of their freaking minds. Yes, I have been saying this for quite some time. And many can point to profits. But those profits are all on paper. Try selling. It’s impossible for everyone to cash out. Those who place their homes on the market now, with aggressive below-market pricing, will likely be able to find suckers. Those who think it’s too early to panic will likely to be trapped down the road. Home are illiquid. It’s seldom too early to panic. When selling real estate, it’s a catastrophe to panic after the panic has already started.