NZ
The REINZ House Price Index showed NZ house prices rose +0.9% for the month of August, now up +2.1% over the last three months. Median days to sell have fallen while monthly sales were up 9% year on year. As buyers feel more certain we’ve reached peak interest rate levels and of cuts coming next year. House prices across the country are now down -16.1% from its 2021 peak, while in Auckland house prices are down -20.7% from its peak, and up about +15% from December 2019 levels.
US
US Inflation (CPI) data came in mixed which didn’t quite give the market direction to help predict the Fed’s next interest rate move. US headline inflation for the month of August rose +3.7% from last year, a jump from +3.2% reported in July and a touch above expectations of 3.6% – the main driver being a +10.6% increase in oil prices.
US Headline Inflation CPI – Not quite there
US Core Inflation (CPI)
As seen below the price of oil had been relatively low from November 2022 to July 2023 (blue area) where oil was mostly range bound between $67 to $80 per barrel. While more recently oil now trades well above $80 per barrel and at one point touched $90 – so we are seeing pressure likely to continue a little bit further.
Core inflation which the Fed excludes the volatility of oil and food prices rose +0.2 on a monthly basis ahead of expectations due to rising airfare, car rental and motor insurance. Market pricing for the Fed funds rate was little changed following the CPI data and continues to imply little chance of a hike next week and about 50% odds of a 25bp increase in November.