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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
Following the RBA Policy Decision on Tuesday, RBA-dated OIS pricing has softened by 6-8bps across meetings out to December 2024. The RBA's decision wasn't surprising, with the market assigning only a 13% probability to a 25bp rate hike at this week's meeting.
- The subsequent softening can largely be attributed to a less hawkish stance from the RBNZ and the post-ADP employment softening in US stir.
- As anticipated, the RBNZ maintained the OCR at 5.50% yesterday but hinted at the possibility of maintaining tight monetary policy for a more extended period rather than tightening further.
- An unexpectedly weak ADP employment report (+81k vs. 150k est. and +177k prior) overnight has increased speculation that the FOMC will maintain its current stance ahead of the upcoming Non-Farm Payrolls report on Friday.
- Terminal rate expectations have decreased by 7bps since the RBA decision, settling at 4.29%. However, they remain roughly 15bps higher than those observed in early September. It's also important to note that the highest level for the terminal rate during this cycle was 4.75%, recorded in early July.
Figure 1: RBA-Dated OIS Terminal Rate Expectations Versus Cash Rate
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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