Aussie bonds look through the much.....>

AUSSIE BONDS: Aussie bonds look through the much awaited JEFU update, with many

of the key details front run by local media reports. There was no roll forward

of income tax cuts. The curve flattened on the day, with YM last trading +0.5

and XM +2.0, with the contracts holding to familiar ranges, as the long end of

the cash curve outperformed, despite the impending ACGB '51 syndication. Touted

long interest in YM/XM at 58.0 may have helped limit any curve flattening.

- All in all, the deficit projections were towards the lower end of market

expectations, but strategists don't see this having a meaningful impact on

yields/curve shape, with bond issuance still set to swell.

- The ratings agencies were quick to weigh in. Moody's noted that they expect

Australia's Aaa rating to remain "resilient," with the country's fiscal repair

set to get underway in '21. While S&P suggested that Australia's AAA credit

rating can absorb the growing fiscal deficit, with the Australian economy set to

recover in 2020-21. S&P also flagged that the risks to Australia's sovereign

credit rating remain tilted to the downside.

- Flash PMI data is due Friday.