STIR: Mixed Performance In $-Bloc Over The Past Week
Rate expectations across the $-bloc through December 2025 posted a mixed performance over the past week, with Canada (+22bps) and the US (+7bps) firming, while Australia (-33bps) and New Zealand (-11bps) softened. Key developments included:
- Rising trade tensions: Investor concerns have intensified around a potential escalation in the US-China trade conflict. Following the latest tariff hike, China now faces an effective 145% tariff rate. This backdrop has supported the short end of global bond curves and STIR markets over the past week.
- The RBNZ cut the OCR by 25bps to 3.50% on Wednesday, as widely expected. This marked the fifth consecutive cut, with the RBNZ leaving the door open for further easing, citing global trade tensions as a key risk to both growth and inflation.
- On Thursday, US core CPI for March surprised meaningfully to the downside, coming in at 2.79% Y/Y (vs. 3.0% consensus), down from 3.12% in February. This marks the softest reading since March 2021.
- Looking ahead: The BoC policy decision is due on 16 April. Markets are currently pricing in just a 37% probability of a rate cut.
- Looking ahead to December 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.38%, -95bps; Canada (BOC): 2.34%, -41bps; Australia (RBA): 2.76%, -134bps; and New Zealand (RBNZ): 2.63%, -87bps.
Figure 1: $-Bloc STIR (%)
Source: MNI – Market News / Bloomberg
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