Consumer mood improves, dragging equities up

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news markets are sensing that consumers are in better heart worldwide that they have been assuming.</p><p>First in the US there was a rise in <a href="https://www.mba.org/news-and-research/newsroom/news/2022/12/21/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications</strong></a> last week, the second straight week of increase after mostly retreats in 2022. That was helped by a fall in mortgage interest rates, and its lowest since September. There is a bit of disconnect here because you will recall that the US Fed raised its policy rate by +50 bps last week.</p><p>However their <a href="https://www.nar.realtor/newsroom/existing-home-sales-dipped-7-7-in-november" target="_blank"><strong>existing home sales</strong></a> are still in retreat. They plunged -7.7% to an annual rate of 4.09 mln in November, and well below market forecasts of 4.2 mln. That is the tenth straight month of falling sales and the lowest level since May of 2020.</p><p>But the latest consumer sentiment indicator, this one from the <a href="https://www.conference-board.org/topics/consumer-confidence" target="_blank"><strong>US Conference Board</strong></a>, recorded a sharpish improvement, but only one reversing the November fall. It is this improvement that has energised the rise on Wall Street today.</p><p><a href="https://www.nar.realtor/newsroom/existing-home-sales-dipped-7-7-in-november" target="_blank"><strong>Canadian CPI inflation</strong></a> inched down to 6.8% in November from a year ago which was a disappointment. Markets had expected to see a rate lower than this, with no change from October. The actual change from October was a very small increase, so the pace is definitely slowing.</p><p>There was another German consumer confidence indicator