We discuss the Tuesday RBA decision, which was more about waiting to assess the impact of their past decisions, and the broader economic dynamics, than a “pivot”, yet many with vested interests are pushing that line. Worth considering the fixed rate cliff, and also the likely rise in unemployment. But the damage has been done, with significantly higher mortgage repayments locked and loaded now.
Author: Martin North
Martin North is the Principal of Digital Finance Analytics
Property Prices Recovering? Well Maybe Not…
Today we look at the February numbers from Core Logic and the ABS new lending data, which refinancing apart remain weak. In fact we are not convinced conditions are likely to lead to sustainable price rises.
The Latest Credit Aggregates
On 31st March the RBA and APRA released their latest monthly data to end February. There was significant evidence of loan growth easing back – a consequence of higher rates and tighter underwriting resulting from the change. That said, another record was breached.
We examine the data.
To The Other Side Of The World
A travel log of our relocation from the Illawarra, Australia, to Bath in the UK. In the past week, we settled the purchase of the new DFA HQ in the UK, flew for more than 24 hours from Sydney to Heathrow, packed the dogs off to the airport for their separate travel itinerary, and also swapped out our Australian car, for a similar model in the UK. In the days ahead, we will begin to get back to making regular shows, but meantime this is a short show in acknowledgement of the thousands of kind comments we received from the community. You are a great bunch, and your appreciation of our work is truly amazing, thanks.
All Is Calm – But Is It The Calm Before The Storm?
In my final show from Australia, I consider the latest outlook for the financial system, ahead of decisions from the FED and Bank of England as markets try to navigate the uncertain signals coming to the surface. It may be calmer for now, but the question is, is this the calm before the storm?
And I will be back from the other side of the world in a few days as things progress with more shows on property and finance.
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Go to the Walk The World Universe at https://walktheworld.com.au/
Banking Crisis – What Banking Crisis? With Damien Klassen
My final chat with Damien Klassen from Nucleus Wealth before I fly out focussed on the current banking crisis and how this might play out ahead.
Things could get very interesting.
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Its Edwin’s Monday Evening Property Rant: Australian Final.
In the final part of our Australian Property Rant series with property insider Edwin Almeida we look at the latest numbers and emerging trends.
After a short break though we will be back with the International Property Rant weekly, so stay subscribed to catch the first in the new series.
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https://www.ribbonproperty.com.au/
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The Bank Of Mum And Dad Goes Pop!
The latest from our surveys shows that the number and proportion of first-time buyers seeking help from parents – via the Bank of Mum and Dad is falling fast.
Not only are new volumes down, but we know that BOMD loans are at greater risk in a rising rate environment.
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Danger: Bank Fragility Ahead!
Are we in the foothills of the next banking crisis? Quite possibly. Investor sentiment remained fragile on Friday despite massive rescue for the banking sector, leaving global equities under pressure while gold prices were poised for their largest one-week rally since March 2020.
The U.S. banking crisis began after two mid-sized lenders — Silicon Valley Bank and Signature Bank— were rescued by the Federal Deposit Insurance Corp last week as depositors yanked billions of dollars from them after fearing about their solvency. Silicon Valley eventually filed for bankruptcy protection over the past 24 hours. A third bank, First Republic, is also in trouble despite receiving a $30 billion cash infusion from a consortium of banks.
SVB Financial Group announced it would seek Chapter 11 bankruptcy protection, the latest development in an ongoing drama that began last week with the collapse of Silicon Valley Bank and Signature Bank which sparked fears of contagion throughout the global banking system.
On Friday, investors lost confidence in U.S. regional banks and Credit Suisse in Europe. Risk appetite waned after showing signs of recovery on Thursday. Credit Suisse’s chief executive said on Friday the bank was working hard to stem customer outflows, although this could take time. Credit Suisse shares resumed their decline.
Fed data on Thursday showed banks sought record amounts of emergency liquidity in recent days, which helped undo months of central bank effort to shrink the size of its balance sheet. Its latest discount window borrowing has further seen banks take $150 billion, which makes for a new record even topping the 2008 GFC.
“Last week the Fed’s balance sheet swelled by $300 billion, wiping out 4 months of QT in one week,” gold bug Peter Schiff wrote in part of a Twitter reaction. “By the end of the month the balance sheet could reach a new high. Rate hikes don’t matter. Inflation is headed much higher, thanks to bank bailouts.”
Markets are pricing in a 25 bps increase by the U.S. Federal Reserve when it meets next week, down from previous expectations for a 50 bps increase. At last glance, financial markets have priced in a 60.5% likelihood that the central bank will raise its key target rate by 25 basis points, and a 39.5% probability that it will let the current rate stand.
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What’s Behind The Banking Crisis?
Earlier in the week I was a guest on TNT Radio, and we discussed the emerging banking crisis, and what lays behind it. Events since reconfirms our view this is a serious structural issue triggered by Central Bank’s reversal on rates, which have put many financial services players under stress.
Significantly, Central Banks are now trying to prop the system up. More finger in the dyke stuff?
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