Aussie bonds head into the close.......>

AUSSIE BONDS: Aussie bonds head into the close lower, the losses having been

sustained during US trade after news that the Trump administration had reached a

deal with Democrats to extend the debt limit by 3-months, and as the BoC hiked

rates prompted some to price in earlier hikes from the RBA. Aussie bonds opened

lower and saw broadly rangebound trade during SFE, ignoring domestic data.

- Retail sales were flat in July against expectations for a 0.2% rise, the June

reading was revised down to 0.2%. Westpac note that "July's soft outcome

confirms that Q2's rebound on a weather affected Q1 has faded, with the

underlying fundamentals of weak wages growth and shaky consumer sentiment

clearly weighing on spending." Trade surplus narrowed to A$460mln from A$888mln

against expectations for a wider surplus of A$1bln. Sources note that the miss

can be explained by a A$330mln drop in non-monetary gold exports, along with

lower iron ore export volumes.

- Yields opened higher across the curve, reversing around half of yesterday's

decline. 10-Year yield last up 4bp at 2.64%, 3-/10-Year spread 0.3bp wider at

60.8bp.