Value of investor housing loans falls 6% in Australia; China inflation figures disappoint; US GDP hit by fall in wholesale inventories; UST 10yr yield 2.24%; oil & gold remain low; NZ$1 = 66.2 US¢, TWI-5 = 71.4

Value of investor housing loans falls 6% in Australia; China inflation figures disappoint; US GDP hit by fall in wholesale inventories; UST 10yr yield 2.24%; oil & gold remain low; NZ$1 = 66.2 US¢, TWI-5 = 71.4

Here's my summary of the key events overnight that affect New Zealand, with news of further signs tighter lending restrictions across the Ditch are taking the steam out of the housing market.

Australian Bureau of Statistics figures show the value of loans approved for investment housing fell 6.1% from September to October, putting it at its lowest level since June last year. Having peaked in April, the value of investor loans have dropped by 15% in the three months to October. 

Meanwhile, the value of loans approved for owner-occupier housing rose 0.4% in October. Overall, the total value of housing finance was down 2% over the month. Economists say weaker population growth and a huge supply pipeline mean the housing market is likely to keep cooling throughout next year and not bottom out until 2017.

There are fears China may be sucked into a Japanese-style deflationary trap. While China's Consumer Price Index (CPI) rose 1.5% in November from the same period last year, it remained well under the government's 2015 target of 3%. A 2.3% uplift in food prices year-on-year boosted the overall figure, however the price of milk and other dairy product fell 0.7%. China's CPI was flat on the previous month.

As for its Producer Price Index (PPI), this dropped in line with expectations, at 5.9% compared to November last year. The manufacturing sector continued to stagnate, forcing companies to drop their wholesale prices to stay in business. Falling 0.5% from October, November marked the index's 45th straight month of decline.

Data out of the US indicates stockpiles of unsold merchandise will again be a drag on growth. US wholesale inventories fell by 0.1% in October, as businesses stepped up efforts to reduce the excess goods they had from record back-to-back increase in inventories in the first two quarters of this year.

October's drop has prompted economists to trim their fourth-quarter GDP estimates by as much as two-tenths of a percentage point to a 1.7% rate.

In New York, the UST 10yr yield benchmark inched up overnight to 2.24%.

The US benchmark oil price remains at a low of US$37/barrel, while the Brent benchmark is just over US$40/barrel. 

The gold price is stable at US$1,074/oz.

The New Zealand dollar has weakened overnight to 66.2 US¢ and 60.2 euro cents. It's up slightly to 92.1 AU¢. The TWI-5 is down to 71.4.

All eyes will be on the Reserve Bank as it reviews the Official Cash Rate this morning. 

If you want to catch up with all the local changes on yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ». And don't forget to vote in the Flag Referendum.

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4 Comments

The US stock market is held up by hot air and cheap money (and insiders cut and run):

http://www.cnbc.com/2015/12/09/corporate-insiders-dump-stocks-in-caution...

'' While insiders have been selling stocks, companies have been repurchasing their own stock, U.S. firms have spent a record amount of corporate cash so far in 2015, some $1.37 trillion on company buybacks and takeovers.

"Amid a slow-growth economy, insiders are spending loads of shareholders' money on takeovers and buybacks to boost revenue as well as earnings per share, but they're selling hard with their own money," Santschi added.

"As for its Producer Price Index (PPI), this dropped in line with expectations, at 5.9% compared to November last year. The manufacturing sector continued to stagnate, forcing companies to drop their wholesale prices to stay in business. Falling 0.5% from October, November marked the index's 45th straight month of decline."

For those baffled by consistently low tradables inflation, this is a major contributor. Then add in Japan's and the EU's monetary easing. Deflation is everywhere.

Anglo America to trim 85,000 jobs.

A rather disturbing development

Joining Anglo American and Kinder Morgan, Freeport-McMoRan announced the full suspension of its dividend.

These are the moves of a business under threat of debt rollover problems; actively managing, for the first time, a potential liquidity bottleneck in combination of a continuing horrible business environment that is no longer being overlooked by a formerly mania-crazed “reach for yield” that not long ago funded almost anything and everything on Janet Yellen’s (Ben Bernanke’s) word alone. As noted yesterday, the “exploration” for asset sales to alleviate the balance sheet devastation that has taken place is going to get more and more crowded – when the debt runs out, the credit cycle turned, the words “bankruptcy” and “liquidation” begin to enter the pertinent lexicon, forcing more drastic, painful attempts. Better to get through the exit, any exit, first. Read more