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Payroll Data Sees US STIR Remove June Easing Expectations

STIR

US STIR shifted firmer in NY trade ahead of the weekend following solid payroll growth and an unexpected decline in the unemployment rate. The move was supported by Fed Bullard’s comments that the Federal Reserve needs to raise interest rates further because growth and employment are likely to remain resilient and inflation is set to decline but only slowly.

  • The market is now pricing a 6% chance of a 25bp rate hike at the June 14 meeting versus a 16% chance of a 25bp cut in the aftermath of the FOMC’s policy decision late last week.
  • Year-end easing expectations were scaled back to 78bp from 87bp at Thursday's close.
  • There has been little movement in CA, AU or NZ STIR since late last week.

Figure 1: $-Bloc STIR: Terminal Rate Expectations & Year-End Pricing



Source: MNI – Market News / Bloomberg

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