Aussie bond futures have filled........>

AUSSIE BONDS: Aussie bond futures have filled Monday's gap higher after the RBA

left the cash rate unchanged. Market and economists were near 50/50 re: the bank

cutting the cash rate today. There was no formal introduction of an easing bias,

however, that could still come in the SoMP, due for release on Friday. YM -8.0

ticks, XM -5.0 ticks.

- The closing paragraph shifted to "the Board judged that it was appropriate to

hold the stance of policy unchanged at this meeting. In doing so, it recognised

that there was still spare capacity in the economy and that a further

improvement in the labour market was likely to be needed for inflation to be

consistent with the target. Given this assessment, the Board will be paying

close attention to developments in the labour market at its upcoming meetings."

This confirms the view that the Bank is increasingly relying on the strength of

the labour market in its assessment of MonPol. Markets now price a ~70% chance

of a cut by the end of August. Bills trade 7-10 ticks lower through the reds.

- The Bank trimmed its GDP & CPI exp. It noted that "the outlook for the global

economy remains reasonable, although the risks are tilted to the downside."