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NZ Outperforms $-Bloc After RBNZ Eases

STIR

STIR markets within the $-bloc have delivered mixed net results over the past week, with New Zealand outperforming and the US underperforming.

  • Year-end official rate expectations softened 13bps in New Zealand over the past week following the RBNZ’s decision on Wednesday to cut the OCR by 25bps to 5.25%. Going into the meeting, the market had priced a 58% chance of a 25bp cut. The market now prices 35bps of easing for the next meeting, with a cumulative 79bps by November.
  • By contrast, the US market has seen year-end official expectations firm 12bps over the past week as US recession risks have been priced out.
  • Overnight, better-than-expected retail sales and jobless claims data saw the probability for a 50bps cut pared. The market is pricing ~32bps of easing at the September FOMC, with 88bps by year-end.
  • There was little net movement in year-end expectations in Canada or Australia.
  • The December 2024 expectations and the cumulative easing across the $-bloc are as follows: 4.45%, -88bps (FOMC); 3.78%, -72bps (BoC); 4.11%, -21bps (RBA); and 4.46%, -79bps (RBNZ).


Figure 1: $-Bloc STIR (%)



Source: MNI – Market News / Bloomberg

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