-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI Podcasts -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
MNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
-
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessIs U.S. STIR Outperformance AU Temporary?
Last week the messaging from the RBA and the Fed could not have been more divergent with RBA Governor Lowe signalling a willingness to consider a policy pause and Fed Chair Powell canvassing the possibility of larger, faster hikes and a higher terminal rate. A commitment to data dependency was seemingly the only common ground.
- A week on and the situation couldn’t be more different with the Silicon Valley Bank (SVB) collapse and concerns of financial contagion delivering dramatic outperformance of U.S. STIR versus AU in terms of pricing out of tightening for the next meeting as well as changes to terminal rate expectations (-150bp Vs. -40bp).
- For Australia (Fig 1), recent events appear to have reinstated a familiar theme for the current tightening cycle, after a temporary departure in February, of the RBA undershooting OIS pricing.
Figure 1: RBA Cash Rate Vs. OIS 6M1M (led 6M)
Source: MNI-Market News / Bloomberg
- For the U.S. (Fig 2), Fed undershoots of OIS pricing have not been part of this cycle so far.
- While the SVB situation may change things, the above charts provide as a timely reminder, ahead of US CPI today and Australian Employment on Thursday, that the respective norms for the current tightening cycles suggest U.S. STIR outperformance versus AU should be seen as temporary.
Figure 2: Fed Funds Rate Vs. OIS 6M1M (led 6M)
Source: MNI-Market News / Bloomberg
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.