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STIR: US YE Pricing Firmer Over Past Week Ahead Of NFP

STIR
BulletMarketsFixed Income Bullets

Year-end official rate expectations across the $-bloc have remained fairly steady over the past week, with the exception of the US, where expectations have firmed by 10bps.

  • In the US, rate expectations strengthened yesterday following stronger-than-expected ISM Services data, which included robust readings for both prices paid and new orders. However, the employment index slipped back into contraction territory, ahead of today’s Non-Farm Payrolls release.
  • Fed Chair Powell also recently attempted to temper expectations of a second 50bp rate cut following the November 6-7 FOMC meeting. Despite this, markets are still pricing in 32bps of easing for that meeting.
  • Outside the US, rate expectations inched up by 3bps in Canada and 1bp in Australia.
  • In contrast, New Zealand's expected year-end OCR softened by 4bps over the past week, with 92bps of easing priced in. For next Wednesday's RBNZ Policy Decision, markets are pricing in a 74% chance (44bps) of a 50bp cut.
  • Looking ahead to December 2024, the expected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 4.22%, -86bps; Canada (BoC): 3.58%, -67bps; Australia (RBA): 4.18%, -14bps; and New Zealand (RBNZ): 4.33%, -92bps.

 

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Year-end official rate expectations across the $-bloc have remained fairly steady over the past week, with the exception of the US, where expectations have firmed by 10bps.

  • In the US, rate expectations strengthened yesterday following stronger-than-expected ISM Services data, which included robust readings for both prices paid and new orders. However, the employment index slipped back into contraction territory, ahead of today’s Non-Farm Payrolls release.
  • Fed Chair Powell also recently attempted to temper expectations of a second 50bp rate cut following the November 6-7 FOMC meeting. Despite this, markets are still pricing in 32bps of easing for that meeting.
  • Outside the US, rate expectations inched up by 3bps in Canada and 1bp in Australia.
  • In contrast, New Zealand's expected year-end OCR softened by 4bps over the past week, with 92bps of easing priced in. For next Wednesday's RBNZ Policy Decision, markets are pricing in a 74% chance (44bps) of a 50bp cut.
  • Looking ahead to December 2024, the expected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 4.22%, -86bps; Canada (BoC): 3.58%, -67bps; Australia (RBA): 4.18%, -14bps; and New Zealand (RBNZ): 4.33%, -92bps.

 

Keep reading...Show less