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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
$-Bloc markets are signaling that further tightening measures are on the horizon, a stark deviation from the message conveyed on May 8 when it was widely believed that the tightening cycle was nearing its conclusion.
- This week has seen a significant firming across meetings as hawkish Fedspeak and the release of FOMC minutes for May, which revealed a division among officials regarding their support for further interest rate hikes, pressure pricing. A cumulative 25bp of tightening is now priced by July, with year-end easing scaled back to 37bp from 51bp on Monday and 80bp on May 11.
- CA STIR has also moved to price in more than one cumulative 25bp hike by October. At the end of last week, only 11bp of further was priced.
- Terminal rate expectations have pushed to a post-May RBA hike high of 4.01% this week ahead of retail sales data for April today.
- In sharp contrast to the other $-Bloc markets, NZ STIR has shunted softer following the dovish hike from the RBNZ. RBNZ dated OIS pricing is 26-29bp softer across meetings with the terminal rate dropping from 5.93% pre-RBNZ to 5.66% currently.
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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