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STIR: $-Bloc Markets Softer Over The Past Week Apart From NZ

STIR
BulletMarketsFixed Income Bullets

In the $-bloc, rate expectations through July 2025 softened over the past week, with the exception of New Zealand, which was largely unchanged. Canada softened by 17bps, while Australia and the US softened by 9bps and 8bps respectively. 

  • The standout event was Wednesday’s RBNZ policy decision. The RBNZ cut rates 50bp to 4.25% as was widely expected by economists and the market as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it.
  • Nevertheless, RBNZ dated OIS pricing currently sits 4-12bps firmer than Wednesday’s pre-RBNZ decision levels.
  • The other event of note was Australia’s CPI print for October, which printed lower than expected at 2.1% but in line with September. However, the trimmed mean increased to 3.5% from 3.2%, the highest since July.
  • The RBA is currently focusing on underlying and services measures due to the temporary decline in headline inflation from government electricity rebates. It also prefers the quarterly CPI data with Q4 out on January 29.
  • Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.99%, -64bps; Canada (BoC): 2.92%, -84bps; Australia (RBA): 3.98%, -34bps; and New Zealand (RBNZ): 3.44, -81bps.

 

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In the $-bloc, rate expectations through July 2025 softened over the past week, with the exception of New Zealand, which was largely unchanged. Canada softened by 17bps, while Australia and the US softened by 9bps and 8bps respectively. 

  • The standout event was Wednesday’s RBNZ policy decision. The RBNZ cut rates 50bp to 4.25% as was widely expected by economists and the market as it felt “more confident to continue removing” policy restrictiveness given inflation is close to the target mid-point and underlying measures are “converging” on it.
  • Nevertheless, RBNZ dated OIS pricing currently sits 4-12bps firmer than Wednesday’s pre-RBNZ decision levels.
  • The other event of note was Australia’s CPI print for October, which printed lower than expected at 2.1% but in line with September. However, the trimmed mean increased to 3.5% from 3.2%, the highest since July.
  • The RBA is currently focusing on underlying and services measures due to the temporary decline in headline inflation from government electricity rebates. It also prefers the quarterly CPI data with Q4 out on January 29.
  • Looking ahead to July 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.99%, -64bps; Canada (BoC): 2.92%, -84bps; Australia (RBA): 3.98%, -34bps; and New Zealand (RBNZ): 3.44, -81bps.

 

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