Economic Report: Home loans gained strength at end of 2015
Owner occupier lending gained traction towards the end of last year. In December, home loans grew 2.6%, following a 1.9% increase in November.
In the year, annual growth stepped down from 10.1% to 9.8%, but remains at a healthy pace.
The proportion of borrowers fixing their loans as a percentage of all dwellings financed jumped up to 13.0% in December, from 11.4% in November.
It was the highest in a nearly a year, and suggests some concern among mortgage holders about rising interest rates.
In an appearance before the House of Representatives Standing Committee on Economics, RBA Governor Glenn Stevens suggested that it will be some time before we can gauge the full impact of volatility in financial markets on aggregate demand.
Investor sentiment lifted on Friday night led by a sharp rise in the oil price and solid US retail sales data. The Dow and the S&P 500 both rose 2.0% and the Nasdaq gained 1.7% for the session.
US government bond yields rose as an easing in investor concerns reduced demand for safe haven government bonds (pushing bond prices lower and yields higher).
A lift in retail sales and higher oil prices boosted bond yields.
Market pricing for the Fed Funds rate rose slightly, now implying the next hike will be in November 2017.
New York Fed President (and dove) Dudley said financial conditions had tightened and will influence FOMC decisions, but also said "key sectors of the US economy, such as the household sector, seem to be in good shape."
Dudley also said talk of negative interest rates in the US was "extraordinarily premature."
Australian government bond yields (implied by futures) continued to rise on Friday night, after gaining ground earlier in the day.
The US dollar index (against a basket of currencies) rose on Friday night driven by a lift in US retail sales and a rise in the oil price.
Signs US consumers continued to spend in January have led to a slight lift in market pricing for Fed rate hikes.
The Yen weakened against the US dollar, giving back some of its safe haven gains of late. Japanese Finance Minister Aso warned on possible intervention saying he was "very nervously watching" rough foreign exchange moves and "will take appropriate steps as necessary."
The Aussie dollar edged higher against the US dollar, to trade around 0.7111 at the time of writing. The New Zealand dollar underperformed, with AUD/NZD rising from 1.0575 on Friday morning, to currently trade around 1.0742.
The oil price rebounded more than 12% on Friday night, to US$29.40 per barrel. Investors were encouraged back into the market after oil hit a 13-year low in the previous session.
The Wall Street Journal reported that United Arab Emirates' energy minister said the Organisation of Petroleum Exporting Countries was willing to cooperate on a cut in output.
Eurozone GDP was in line with expectations, rising 0.3% in Q4, after rising 0.3% in Q3. For the year to Q4, Eurozone GDP gained 1.5%, slowing slightly from the 1.6% pace in the year to Q3.
Food prices rose 2.0% in January, after slipping 0.8% in December.
For the year to January, food prices fell 0.6%.
Retail sales rose by 0.2% in January, after increasing by an upwardly revised 0.2% in December (previously reported as a 0.1% decline).
The increase in retail sales was encouraging given the decline in equity markets in January.
US consumer sentiment was softer than expected, easing to 90.7 in February, from 92.0 in January, according to the University of Michigan measure.
The decline in both the current conditions and expectations component likely reflects negative financial news headlines over the month.