Breaking point
Yesterday saw the release of Australia's lending indicators figures, with new home loans up by a solid +1.3 per cent over the month of June.
The increase was largely due to an increase in activity from investors.
The average loan size for owner-occupiers increased to a new high of $636,000.
APRA's ADIs data showed there to be little high debt-to-income lending and little high LVR lending (as well as almost no low-doc lending), suggesting that at least part of the higher 'average' home loan is due to lower income earning prospective owner-occupiers being locked out of the market by the lending assessment buffer.
CommSec with the chart:
Of course James Foster ran through all the key data here.
Meanwhile in the US it looks like the labour market has finally cracked.
Payrolls figures missed badly to the downside, and the unemployment rate jumped to 4.3 per cent, which was the highest since 2021, and now up significantly from the cycle lows.
Average hourly earnings increased by only +0.2 per cent, to be +3.6 per cent higher over the year.
With oil prices tumbling there was an interest rate cut coming anyway, but it now looks likely that the Federal Reserve will go with a 50 basis points cut next month as the data continues to deteriorate.
The US 10-year Treasury yield has plunged to under 3.8 per cent, while US mortgage rates fell to their lowest level of 2024.
The Federal Reserve believes that the funds rate is around 275 basis points above a 'neutral' setting, so expect to see a lot of easing over the next 18 months.
