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STIR: $-Bloc Markets Softer Over The Past Week Ahead Of US Payrolls

STIR
BulletMarketsFixed Income Bullets

In the $-bloc, rate expectations through July 2025 have softened 9-11bps over the past week. 

  • The standout event was Wednesday’s weaker-than-expected Australian Q3 GDP.
  • The Australian economy grew at 0.3% over Q3, 20bps lower than expected, and 0.8% y/y, 30bps below expectations. Growth was propped up by public sector expenditure, up 1.4%, with Government consumption and public investment both contributing to the Q3 result.
  • Expectations for the September 2025 meeting have softened by approximately 35bps over the past two weeks. Despite the broader repricing, the likelihood of a December rate cut remains low, with the market assigning only a 5% probability. A 25bps rate cut is not fully priced until May. In mid-November, a full 25bps cut wasn’t expected until August.
  • Looking ahead, the US calendar will see key employment data for November. We expect a soft payrolls report to cement expectations of a 25bp cut from the FOMC on Dec 18 (currently 18.5bp priced) whilst a strong report would see next week’s CPI as the decider. (See MNI US Payrolls Preview here)
  • The Federal Reserve enters its self-imposed blackout period at midnight Friday.
  • Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.89%, -74bps; Canada (BOC): 2.85%, -90bps; Australia (RBA): 3.85%, -47bps; and New Zealand (RBNZ): 3.35, -90bps.

 

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In the $-bloc, rate expectations through July 2025 have softened 9-11bps over the past week. 

  • The standout event was Wednesday’s weaker-than-expected Australian Q3 GDP.
  • The Australian economy grew at 0.3% over Q3, 20bps lower than expected, and 0.8% y/y, 30bps below expectations. Growth was propped up by public sector expenditure, up 1.4%, with Government consumption and public investment both contributing to the Q3 result.
  • Expectations for the September 2025 meeting have softened by approximately 35bps over the past two weeks. Despite the broader repricing, the likelihood of a December rate cut remains low, with the market assigning only a 5% probability. A 25bps rate cut is not fully priced until May. In mid-November, a full 25bps cut wasn’t expected until August.
  • Looking ahead, the US calendar will see key employment data for November. We expect a soft payrolls report to cement expectations of a 25bp cut from the FOMC on Dec 18 (currently 18.5bp priced) whilst a strong report would see next week’s CPI as the decider. (See MNI US Payrolls Preview here)
  • The Federal Reserve enters its self-imposed blackout period at midnight Friday.
  • Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.89%, -74bps; Canada (BOC): 2.85%, -90bps; Australia (RBA): 3.85%, -47bps; and New Zealand (RBNZ): 3.35, -90bps.

 

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