This is an edited version of our live discussion with Damien Klassen, Head Of Investments At Nucleus Wealth And Walk The World Funds. Given the recent reversals in bond yields, and the US Dollar, what does this say about the markets as we move into the close of the year?
We discussed the RBA rate call, bond markets, oil prices and some interesting sectoral moves.
Original live stream here: https://youtube.com/live/b0eg9wogerQ
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The latest from Edwin as we look at the trends and numbers for this week. The construction questions surrounding high-rise continues, as the listings in Melbourne rise. Now we come to the upcoming Christmas and New Year break – how will this impact the numbers?
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Contrary to the MSM reporting, home prices are falling fast in some locations. Of course there is lots of spin about relating to this, but are we highlighted in our shows last year, falls were, and are occurring. Once again need to go granular.
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As we move into November, global stock indexes swung sharply as the U.S. dollar dropped to a six-week low and benchmark 10-year U.S. Treasury yields fell to five-week lows on Friday.
The catalyst was data showed U.S. job growth slowed more than expected in October with some seeing this as meaning the Federal Reserve may be done hiking interest rates. We will see.
The Fed, Bank of England, Canada and other Central Banks have all held rates, in recent times, while continuing to underscore the drive towards their inflation targets will mean rates stay higher for longer.
U.S. two-year yields were the lowest since early September after U.S. job growth slowed in part as strikes by the United Auto Workers union against Detroit’s “Big Three” carmakers depressed manufacturing payrolls. The data also showed the increase in annual wages was the smallest in nearly 2-1/2 years, pointing to an easing in labor market conditions.
The U.S. dollar index dropped to a six-week low after the jobs data. In afternoon trading, the dollar index fell 1%, with the euro up 1.04% to $1.0730. “The good news here is that the slowdown will likely keep the Fed on the sidelines going forward,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts. “One of their key concerns has been an overheated economy, especially after last quarter’s GDP growth, and this suggests that problem is going away.”
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As expected, the US central bank’s policy-setting Federal Open Market Committee kept rates on hold following their latest meeting – in a target range of 5.25%-5.5%, a 22-year high. The decision is unanimous 12-0.
The S&P 500 index and Treasuries extended their rally while the dollar slipped after the announcement. Traders also marked down chances of another hike over the coming months.
Officials made minimal changes to the statement. One tweak was to upgrade their description of the pace of economic growth to “strong” from “solid” to reflect better economic data released since their September gathering.
They continue to leave the door open to another hike by repeating prior language on “determining the extent of additional policy firming that may be appropriate”.
They said the economy expanded at “strong pace in third quarter,” compared with prior description of recent “solid pace”; though job gains “have moderated since earlier in the year but remain strong,” after previously saying that hiring had slowed in recent months.
And they flagged that tighter financial and credit conditions” will likely to weigh on economy, after previously mentioning only “tighter credit conditions”; language could be seen as suggesting that the recent jump in long-term Treasury yields reduces the impetus for Fed to raise rates again. “The extent of these effects remains uncertain,” the Fed said, repeating that it “remains highly attentive to inflation risks.”
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I caught up with Queensland Senator Rennick, and discussed a range of important issues including the accountability and independence of the RBA, regional banking and the digital divide, the digital content bill, and finally, and importantly the role and effectiveness of democracy.
Gerard Rennick is an Australian politician who has been a Senator for Queensland since July 2019. He is a member of the Liberal National Party of Queensland and sits with the Liberal Party in federal parliament.
On 8 July 2023 at the LNP Annual Convention in Brisbane, Rennick lost preselection for the third position on the LNP’s senate ticket for the next federal election, after being narrowly defeated by Stuart Fraser, the party’s treasurer
This is an edited edition of our latest live discussion with Tony Locantro from Alto Capital. Tony is an Investment Manager at Alto Capital in Perth Australia. He has been an active adviser specialising in ASX small cap companies in the mining, biotech and emerging industrial sectors. He was formerly in the NSW Police Force up until November 1998.
Tony has the knack of tell things as they are, warts and all.
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More from our Property Insider Edwin Almeida as we examine the latest data from the markets. Will international ructions impact the market, as sky-high migration continues? Will Canberra succeed in its latest property venture? Will agents “fix” commissions? And will Victoria be the epicentre of the next leg down?
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Today’s post is brought to you by Ribbon Property Consultants.
The prospect of another interest rate rise on Melbourne Cup day has shaken buyers’ confidence, sending auction clearance rates to their lowest level in seven months, data from CoreLogic shows.
Preliminary results show 68.5 per cent of the reported auctions across the combined capital cities were successful, which is 2.3 percentage points lower than the previous week and weaker than the average for this time of the year.
It comes as the number of homes taken to auction soared to 3383, which is the largest volume since the week before Easter last year.
Tim Lawless, CoreLogic research director, said such a large number of auctions was always going to test the depth of buyer demand. “Basically, it has not passed the test as shown by the lower clearance rates, which lines up with renewed speculation that interest rates are about to go higher once again,” he said.
And as reported in the AFR, a build-up in home listings and worsening affordability slashed the rate of house price growth by a third to 1.9 per cent across the combined capital cities during the September quarter, a new report from Domain shows.
Nicola Powell, Domain’s chief of research and economics, said the pace of price increases would moderate further amid rising supply, but the prospect of another interest rate increase was unlikely to halt the broader upswing and reverse the earlier gains. We will see!
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