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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.
STIR
Extending the previous analysis of post-banking crisis developments in $-Bloc STIR to NZ highlights it as a clear outlier.
- Next Meeting: Unlike its Antipodean neighbour, RBNZ dated OIS has basically maintained pricing of a 25bp hike at the April meeting through the eye of the banking crisis storm. Moreover, it has done it despite news that the NZ economy wasn’t running as strongly as the RBNZ was expecting at the end of 2022. Indeed, with Q4 GDP printing -0.6% Q/Q the NZ economy is on recession watch.
- Terminal Rate Expectations: When it comes to terminal rate expectations NZ STIR’s willingness to run its own race is even more noticeable. Whereas AU and US STIR delivered terminal rate expectations declines of 77bp and 75bp respectively, RBNZ dated OIS has only declined 42bp.
- Once again, while NZ pricing may simply reflect pessimism with respect to the inflation outlook, it also likely reflects RBNZ’s reputation as an overshooter of OIS expectations this cycle. Accordingly, the market appears priced on the basis that the RBNZ is likely to want clearer signals that it has done enough in its fight against capacity constraints and inflation before halting tightening.
Figure 1: Terminal Rate Expectations: US, AU & NZ
Source: MNI – Market News / Bloomberg
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.
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