STIR: RBA Dated OIS Pricing Firmer Than Pre-Q4 CPI Levels Beyond February
Feb-13 02:13
RBA-dated OIS pricing is flat to 4bps firmer across 2025 meetings today, led by late-2025 contracts, following yesterday’s hotter-than-expected US CPI data.
- Headline and core CPI inflation exceeded market expectations by 1-2bps, with the services component (excluding housing and energy)—a key Fed measure of domestic inflationary pressure—rising sharply by 0.8% m/m.
- OIS pricing is now firmer compared to pre-Q4 CPI levels on 24 January, with the Aug-25 meeting up 14bps over the past week.
- A 25bp rate cut in April remains fully priced (113%), while the probability of a February cut stands at 82%, based on an effective cash rate of 4.34%.
- Historically, it would be highly unusual for the RBA to diverge from market expectations, particularly given its lack of any official or unofficial pushback—a stance it has actively taken in the past.
Figure 1: RBA-Dated OIS – Today Vs. Pre-Q4 CPI
Source: MNI – Market News / Bloomberg
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JPY: USD/JPY Spikes On BoJ Headlines, Before Reversing
Jan-14 02:00
USD/JPY spiked higher as headlines from BoJ Deputy Governor Himino crossed. We got to 158.02, but sit back unchanged now, last near 157.50. Earlier lows in the pair were at 157.12.
- Arguably Himino gave something for both BoJ doves and hawks. He reiterated the well-worn line that the central bank will raise rates if the outlook is realised. Himino added inflation expectations have rise to around 1.5% and that he hopes this year's wage increases are strong. The recent branch managers meeting for the BoJ were firm Himino added.
- These remarks were largely in line with previous BoJ comments, including those made by Governor Ueda. Himino it isn't desirable to surprise markets (outside of crisis periods).
- Still, Himino noted a rate hike will be discussed next week and that is isn't normal for real rates to stay negative once the deflationary backdrop has dissipated. Himino also stated that central banks should not fully communicate what they will do in advance so that markets can fully price in such an outlook.
- Himino added US policy will be watched closely and that Trump's inauguration speech is likely to deliver policy direction clues.
- Some of these hawkish undertones have helped USD/JPY pull back from session highs. Broader USD sentiment is also softer.
MNI: CHINA PBOC CONDUCTS CNY55.0 BLN VIA 7-DAY REVERSE REPO TUES
Jan-14 01:21
- CHINA PBOC CONDUCTS CNY55.0 BLN VIA 7-DAY REVERSE REPO TUES
CNH: USD/CNY Fixing Steady, Error Term Narrows
Jan-14 01:18
The USD/CNY fix printed at 7.1878, versus a Bloomberg market consensus of 7.3202.
- This keeps the fixing error wedged under 7.1900 for now. The fixing error narrowed to -1324pips, versus -1565pips yesterday.
- USD/CNH got to lows of 7.3342 in the first part of trade (aided by broader USD softness post headlines that the US economic team advising Trump was considering gradual tariff shifts). However, we sit higher now, last near 7.3450, little changed for the session.
