It was a very quiet session for the....>

AUSSIE BONDS: It was a very quiet session for the space. The RBA left the cash

rate unch. at 1.5% as exp., maintaining its central view on the AU econ, but

adopted a more downbeat tone on the Chinese econ & highlighted the risks from

U.S. trade pol. The Bank flagged lower inflation in '18, with slightly higher

inflation in '19 & '20, giving a nod to adjustments in the SOMP. The Bank also

stated that it exp. the jobless rate to decline over the next couple of years,

to ~5% (prev 5.25%), perhaps another adjustment for the SOMP. On housing the

Bank continued to note the decline in Sydney & Melbourne prices. The Bank also

noted the recent downtick from cycle highs in funding rates & also pointed to

avg. mortgage rates being lower than a year ago.

- Bonds operated in a narrow range. The domestic 3-/10-Year yield differential

has flattened by 2.8bp, with cash bonds back into the swing of things after

yesterday's Sydney bank holiday. Repo rates have settled into 40/45bp over OIS,

while 3-Month BBSW fixed ~0.2bp lower. The Bill strip trades unch. to 2 ticks

higher.

- RBA Gov. Lowe is due up on Wednesday, with the RBA's SOMP due Friday.