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A fresh bid came into Aussie bonds.....>

AUSSIE BONDS: A fresh bid came into Aussie bonds on the back of the move higher
in the domestic unemp. rate, as the participation rate hit record levels.
Meanwhile, the larger than exp. headline emp. gain was driven by part time hires
as full-time emp. fell. Elsewhere, underemp. edged higher. Also worth
highlighting the much narrower than expected budget deficit for FY18/19.
- YM & XM +8.0 last, leaving YM/XM at 30.5 and the cash equivalent at 27.5bp.
- Decent paying in IRM0 & U0 has been seen, with the strip last 6-4 ticks higher
through the reds.
- Chances of a 25bp cut at the RBA's Oct meeting now sit at ~80%, per the IB
strip, with more of the sell-side getting on board with the idea of a cut at
that meeting in the wake of the uptick in the unemp. rate (CBA were the latest
notable name to join that particular train of thought after J.P.Morgan did the
same yesterday). RBA Govenor Lowe's next address, scheduled for this coming
Tuesday, will be key re: shaping expectations.
- Some desks pointed to widening Repo-OIS levels as initial signs of funding
pressure ahead of the financial year end for domestic banks.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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