Aussie bonds saw another fairly........>

AUSSIE BONDS: Aussie bonds saw another fairly quiet day despite a busy session

for data. Aussie bonds opened slightly lower tracking the move downward in US

tsys. Aussie bonds then proceeded to ignore the domestic and Chinese data ahead

of the RBA announcement.

- The domestic data was mixed, the CBA Manufacturing PMI coming in at 54.4 from

56.2 in June, the AiG Performance of Manufacturing hitting 56.0 from 55.0 in

June, CoreLogic House Prices rose 1.5% on the month from 1.8% in June.

- The RBA kept rates on hold at 1.50% as expected by all economists, they kept

forecasts essentially unchanged and mentioned that a strong AUD provided

headwinds for the economy. This prompted a brief blip higher alongside a drop in

AUD, but this was shortlived and futures are no back at pre-announced levels.

3-Year last down 3 ticks at 98.02, 10-Year last down 4.5 ticks at 97.275. US

tsys fell due to real money selling which accounts for the drop in Aussie bonds.

Yields up 2.2-4.3bp with the curve steepening.

- Sources did note AUD/USD swaps have narrowed again; seeing some paying USD

5y5y against AUD leaving swap dealers long market and looking to sell in USD.