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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.
STIR
Yesterday we highlighted NZ STIR as an outlier in the $-Bloc with regard to its relatively modest reduction in terminal rate expectations since early March. In terms of explanations, we believed the RBNZ’s reputation as an overshooter of OIS expectationsthis cycle was a key contributor.
- With the Fed delivering a dovishly perceived 25bp hike yesterday, post-FOMC pricing appears to have strengthened NZ STIR’s status as a $-Bloc outlier.
- RBNZ dated OIS has 43bp of tightening over meetings to July priced versus 9bp, 31bp and 35bp of easing respectively priced for the RBA, the BoC and the Fed over the same period.
- Interestingly, with RBNZ Chief Economist Conway (in a speech today) stating that the OCR is near the peak and comfortably above neutral with the full contractionary effects yet to be felt, one must wonder when the NZ STIR will play catch-up with its $-Bloc peers in terms of terminal rate pricing as well as year-end easing.
- A pause in April is possible, but the May MPS would appear more logical for a policy guidance re-set on the back of a new set of forecasts encompassing both local growth setbacks and global growth developments.
Figure 1: $-Bloc STIR
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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