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Australian Market Softer Over Past Week, Rest Of $-Bloc Little Changed

STIR

Terminal rate expectations in most of the $-bloc have changed little in the week since the Federal Reserve's widely anticipated decision to raise the funds rate to a range of 5.25% to 5.50%.

  • The exception worth noting is the Australian market, where the expected terminal rate has softened by 20bp over the past week or so to 4.24%.
  • The softening in expectations began when lower-than-expected Q2 inflation data was released and was further supported by the RBA's decision to keep the cash rate unchanged at 4.1% during this week's meeting.
  • To provide context, Australian terminal rate expectations were at 5.75% in early July before the RBA's two meeting pause.

    Figure 1: $-Bloc STIR: Terminal Rate Expectations & Mar’24 Pricing



    Source: MNI – Market News / Bloomberg

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