STIR: $-Bloc Markets Little Changed Over Past Week
Rate expectations across the $-bloc have remained broadly unchanged through December 2025 over the past week.
- This stability comes despite a series of key economic releases across most $-bloc economies. Later today will see the April US Employment Report, with the market expecting 138k jobs created after 228k last month. The unemployment rate is expected to be unchanged at 4.2%.
- In Australia, Q1 headline and underlying inflation printed 0.1pp higher than expected but the trimmed mean at 2.9% y/y is below the top of the RBA's 2-3% target band for the first time since Q4 2021. The data was close to the RBA's expectations and at this stage consistent with inflation sustainably remaining within the band. Thus, another 25bp rate cut to 3.85% is likely on May 20.
- The muted reaction underscores how market focus remains firmly on headlines surrounding U.S.–China trade tensions, with macroeconomic data taking a back seat.
- Looking ahead, the next major policy event in the $-bloc is the Fed's May 7 meeting, with markets currently pricing in just an 8% chance of a rate cut.
- Looking ahead to December 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.46%, -88bps; Canada (BOC): 2.23%, -52bps; Australia (RBA): 2.98%, -112bps; and New Zealand (RBNZ): 2.74%, -76bps.
Figure 1: $-Bloc STIR (%)
Source: MNI – Market News / Bloomberg
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AUD: A$ Generally Stronger Ahead Of US Tariff Announcement, AUDNZD Lower
AUDUSD is approaching its earlier intraday high of 0.6291 and is currently 0.2% higher during today’s APAC session at 0.6290 as markets wait for details on US reciprocal tariffs due to be announced at 1600 ET or 0700 AEDT Thursday. The USD index is unchanged.
- Aussie strengthened further against the yen after the pair rose 0.2% yesterday. AUDJPY is up 0.3% to 94.21 today, close to the intraday high of 94.25. AUDEUR is 0.1% higher at 0.5825 and AUDGBP +0.2% to 0.4867. These gains could be unwound though if US tariffs are seen as worse than expected; a scenario which would likely drive a pullback in risk.
- The AUD is 0.1% lower against risk-sensitive kiwi at 1.1003. It has again found support at 1.1000 and is currently hovering around this level.
- Equities are mixed with the ASX up 0.2%, CSI 300 flat but the Hang Seng down 0.6% and S&P e-mini -0.1%. Oil prices are little changed with WTI around $71.20/bbl. Copper is up 0.3% and iron ore around $104/t.
- Apart from the US tariff announcement, the Fed’s Kugler speaks on inflation expectations and March US ADP employment and February orders are released. The ECB’s Lagarde, Schnabel and Lane talk.
AUSSIE BONDS: Little Changed Ahead Of Tariff Announcement, Bldg Apps Trend Up
ACGBs (YM -1.0 & XM +1.0) are little changed after dealing in narrow ranges in today’s local session.
- There was a small payback in February non-house building approvals after the sharp rise over December/January. Nevertheless, looking through the volatility the total number is trending robustly higher. While it fell 0.3% m/m in February, less than expected, it was up 25.7% y/y after 21.6% and 3-month annualised momentum continues to run just under 30%. There has been a significant demand/supply imbalance in Australian housing and the positive trend in building approvals is welcome news.
- Cash US tsys are ~2bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- Cash ACGBs are 1bp richer to 1bp cheaper, with the 3/10 curve flatter and the AU-US 10-year yield differential at +21bps.
- Swap rates are 2-3bps lower, with EFPs tighter.
- The bills strip is +1 to +2 across contracts beyond the first (-1).
- RBA-dated OIS pricing is slightly firmer today. A 25bp rate cut in May is given a 77% probability, with a cumulative 72bps of easing priced by year-end (based on an effective cash rate of 4.09%).
CHINA PRESS: China Optimises Cash-pooling Service For Multinational Firms
China will promote a pilot cash-pooling service nationwide for multinational companies to integrate domestic and foreign currency management, according to a draft statement released by the People’s Bank of China. The initiative, currently open for public feedback, further facilitates the transfer and use of funds, and reduces corporate costs. The pilot programme launched in Beijing and Shenzhen in 2021 before expanding to eight other regions in 2022. (Source: China Securities Journal)
