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STIR
RBA dated OIS pricing 4-6bp softer for meetings beyond August with early '24 leading ahead of the RBA Statement on Monetary Policy (0230 BST).
- Only a 7% chance of a 25bp rate hike at the RBA's June meeting is priced. Terminal rate expectations currently sit at 3.87% versus 3.97% immediately after the RBA meeting.
- The May decision statement was largely unchanged from April, except for revised forecasts, a discussion on service price pressures, and an emphasis on returning inflation to target in “a reasonable timeframe”. The Bank's concerns are based on the tight labour market and wage growth, which remains consistent with the target only if productivity growth picks up.
- Accordingly, the market will pore over the forecast update for clues about the policy outlook. RBA Kohler revealed on Wednesday a downward revision to growth but with a basically unchanged inflation outlook.
- Attention will also be paid to the discussion on services inflation given its emphasis in the decision statement.
Figure 1: RBA-Dated OIS – Today Vs. Yesterday
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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