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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
With the 25bp rate hike from the FOMC widely anticipated, the market’s focus was on the policy outlook. The FOMC's forward guidance signaled a potential pause at the June 14 meeting, with the previous tightening bias replaced with a more tentative statement indicating that "additional policy firming may be appropriate," taking several factors into account.
- Fed Chair Powell has also stressed the importance of data-driven decision-making, and the Fed will make decisions on a meeting-by-meeting basis. Ahead of the next meeting, two more employment and CPI reports are due.
- Despite this, US STIR pricing softened aggressively across meetings, with year-end easing shifting 21bp to 87bp, and the market now pricing a 16% chance of a 25bp rate cut at the June 14 meeting.
- In contrast, AU & NZ STIR (assuming a 25bp hike by the RBNZ at its May 24 meeting) have a roughly 30% chance of an additional 25bp tightening priced out to July/August.
Figure 1: $-Bloc STIR: Terminal Rate Expectations & Year-End Pricing
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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