UK DATA: BOE Credit Data In Line, Continued Pre-Budget Housing Resilience
BOE money and credit data for October again printed broadly in line with expectations. New mortgage approvals continue to trend around the historical average. On the whole, the release points to resilience in the housing market in the lead-up to the Budget, and a return to historical norms following frontloading of homebuying in March.
- New mortgage approvals came in at 65.0k, broadly in line with consensus of 64.5k, and almost exactly in line with the average level since 2016 of 64.9k.
- Net lending on dwellings dropped to GBP4.3bln, marginally below consensus of 4.5bln and down from the 5.2bln (revised from 5.5bln) in September. The figure through this year has still remained around its long-term average, aside from frontloading of mortgage lending ahead of Stamp Duty changes in April.
- The key takeaway on mortgage rates is that while quoted rates remained stable in October, those refinancing from either a 2-year or 3-year fixed rate mortgage would still see big drops to their borrowing costs in excess of 1.5ppt while those remortgaging from a 5-year fixed rate will see a jump of over 2ppt on average.
- Net consumer credit fell to GBP1.1bln (vs 1.3bln cons, 1.4bln Sep, revised from 1.5bln). This was the second consecutive fall, however the annual growth rate for all consumer credit remained unchanged at 7.2%.
- Also in the release, M4 money supply decreased slightly on the month, at -0.2% (vs 0.6% Sep), but the Y/Y rate remains in line with previous data this year, printing at 3.5% (vs 3.7% Sep, revised from 3.6%).
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
