Stocks surge
Stocks were up another 3 per cent overnight, and up 5 per cent in a couple of days in the US
There's also another big green day ahead for Aussie stocks after yesterday's bonanza.
What gives? Two things...
Demand finally cooling
Firstly, it looks like the Fed's rate hikes are beginning to work.
Job openings have fallen 1.8 million from their March highs are now at their lowest level in 14 months.
Yesterday's figures presented the biggest monthly drop since the pandemic panic of April 2020.
Job openings are still high, at 1.7 per unemployed person, but they're well down from 2 per unemployed per person a few months back.
Australia's job ads are also now in decline, albeit not as sharply as this.
Supply issues easing
And secondly, on the supply side, pressures are also beginning to right themselves.
The China-to-US West Coast container price collapse carries along its merry way, down another 20 per cent last week, to now sit below 2018 levels.
The ISM Manufacturing data over the past week has also suggested that supply stress is now easing, if not over, with business prices and supplier deliveries falling away.
It's always hard to know which factors are making the most difference, but overall it looks as though supply and demand are moving back into balance.
The forthcoming data releases for nonfarm payrolls (including unemployment) and inflation will be watched extremely closely by Wall Street for confirmation of the above.
But you can clearly see from the action in the stock market over the past couple of days that market participants are getting excited.
The wrap
Aussie borrowers breathed a small sigh of relief yesterday, with markets trimming a couple of interest rate hikes from expectations and pricing for a lower terminal cash rate in this cycle.
It will be interesting to see how this impacts housing market sentiment over the weekend and beyond, as there have been plenty of pre-approved buyers sitting on their hands and waiting for lower prices.
Sydney has over 650 auctions schedule for this weekend, and Melbourne more than 700, so it should be a reasonable test of market sentiment and conditions.
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Reuters reported a big quarter for office leasing in New York.
Still below pre-pandemic levels, but a sign that people are returning to the office.
Leasing volume was up 50 per cent from 2021, and office availability dived to 16.8 per cent in its sharpest quarterly decrease for eight years.
Things might not go fully 'back to normal' for office leasing, with more firms adopting a hybrid model, but the commercial office market also appears to be moving back into balance over time.
