AUD: Business conditions rose modestly, housing finance fell - TDS

Research Team at TDS, notes that the business conditions and housing finance were the main economic releases from Australia this morning.

Key Quotes

“NAB business confidence for Sep remained steady at 6, while business conditions rose modestly to +8 index points (vs prior +7). Although employment dropped from +4 to +1, it still remains in the positive region. Overall, confidence remains encouraging across most industries.

Housing finance fell 3% in Aug, weaker than consensus (-1.5%), closer to TD’s estimate of –2.5% and July’s drop of –4.2% was revised to –4.5%. This was the largest back-to-back decline in 5 years.  The value of loans to owner-occupiers dropped 1.6%/m, -4.6%/yr while investor home loans rose 0.1%/m in August. Overall see little implication for monetary policy from this report. If anything it suggests the risks in the housing market have eased.

The AOFM announced a new benchmark 30yr bond issue will be priced tomorrow. Our thoughts can be accessed here. The indicative range the new bond will issue at is 100-107bps above the implied 10yr bond future, but this is at least 5bps cheap to where we see fair. This should see the new 30yr well supported, but we are unwilling to chase duration.”