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More Tightening Priced In the $-Bloc

STIR

This week, $-Bloc STIR opens with additional tightening priced in all markets, leaving little possibility of any easing by the end of the year.

  • Mixed policy opinions with the US Fed out of blackout on Friday. Richmond Fed President Barkin noted that slowing the pace of hikes gives the Fed more time to assess data and that the Fed can do more if slowing demand doesn't lower inflation. Gov Waller said that as the labour market is still strong and core inflation is sticky there is probably going to be some more tightening to try and tame price pressures.
  • FOMC dated OIS price 18bps of hikes for the July meeting, a terminal rate of 5.30% is seen in September with 10 bps of cuts priced for 2023.
  • RBA dated is 1-6bp softer across meeting in early Monday with February leading. Terminal cash rate expectations sit at 4.60%, equating to a cumulative 53bp of tightening priced by November.
  • RBNZ dated OIS pricing is little changed in Monday trade with terminal OCR expectations at 5.61%.

Figure 1: $-Bloc STIR



Source: MNI – Market News / Bloomberg

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