Aussie bonds lower at the open,........>

AUSSIE BONDS: Aussie bonds lower at the open, taking their lead from UST's which

dropped on US tax plan optimism, US Republicans have reached an agreement on the

deal and votes in the Senate and House are planned midweek with hopes that Trump

will sign the bill before Christmas. Optimism over the deal pushed US stocks to

record highs at the close on Friday, Australian stocks have taken a positive

lead from this which has weighed on bonds.

- Australia release their Mid-Year Fiscal and Economic Outlook (MYFEO), they

predict the budget deficit will narrow to A$23.6bln, narrower than the previous

forecast in the May budget. GDP growth downgraded slightly to 2.5% from 2.75%

for 2017/18 fiscal year, jobless rate forecasts edge slightly lower to 5.25%

from 5.5% but wage growth also forecasted 0.25ppts lower at 5.25%. Net debt

expected to peak in 2018/19 at 19.2%, lower than the 19.6% peak estimated in

May.

- Should be noted that these forecasts are seen as conservative in a bid by

Australian Treasurer Morrison to under promise and over deliver, the opposite

has been true recently.