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STIR: $-Bloc Markets Firmer Over the Past Week, Except For NZ

STIR
BulletMarketsFixed Income Bullets

In the $-bloc, rate expectations through December 2025 are mostly firmer over the past week, except for New Zealand. Canada’s year-end expectations firmed 17bps over the past week, with the US +12bps and Australia +8bps. New Zealand was unchanged.  

  • In the US, sequential price pressures in the January CPI report exceeded all expectations, but the hawkish impact was blunted 24 hours later by relatively benign PPI details.
  • Following the data, Fed Chair Powell cautioned in his congressional testimony that while CPI “was above almost every forecast”, it would be “wise” to wait for the PPI report which would help fill in the gaps for PCE which is as he said “a better measure of inflation”.
  • And while the January PPI aggregates came in above expected the broad array of individual price categories that feed into PCE came in significantly softer than most had anticipated, spurring analysts to downwardly revise their core PCE estimates to well below the CPI equivalent – if still too high for comfort.
  • Looking ahead to December 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 4.01%, -32bps; Canada (BOC): 2.53%, -47bps; Australia (RBA): 3.56%, -78bps; and New Zealand (RBNZ): 3.04%, -121bps.

  

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In the $-bloc, rate expectations through December 2025 are mostly firmer over the past week, except for New Zealand. Canada’s year-end expectations firmed 17bps over the past week, with the US +12bps and Australia +8bps. New Zealand was unchanged.  

  • In the US, sequential price pressures in the January CPI report exceeded all expectations, but the hawkish impact was blunted 24 hours later by relatively benign PPI details.
  • Following the data, Fed Chair Powell cautioned in his congressional testimony that while CPI “was above almost every forecast”, it would be “wise” to wait for the PPI report which would help fill in the gaps for PCE which is as he said “a better measure of inflation”.
  • And while the January PPI aggregates came in above expected the broad array of individual price categories that feed into PCE came in significantly softer than most had anticipated, spurring analysts to downwardly revise their core PCE estimates to well below the CPI equivalent – if still too high for comfort.
  • Looking ahead to December 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 4.01%, -32bps; Canada (BOC): 2.53%, -47bps; Australia (RBA): 3.56%, -78bps; and New Zealand (RBNZ): 3.04%, -121bps.

  

Keep reading...Show less