MNI Market Analysis: Aussie Bills......>

AUSSIE BONDS: MNI Market Analysis: Aussie Bills Weekly Update

- Soft GDP & retail sales data triggered fresh calls for RBA rate cuts,

promoting flattening across the IR strip. The latest round of economic data

resulted in J.P.Morgan & UBS changing their RBA calls, with both now looking for

the RBA to cut rates in July & August 2019. Nomura had already shifted their

call to July & August rate cuts on Monday. Elsewhere NAB & Macquarie now look

for 2 cuts through the remainder 2019. Markets price a ~75% chance of at least

one RBA rate cut by year end, based on interpolated swaps.

- The RBA's latest MonPol decision was largely ignored, with the Bank continuing

to look to the strength of the domestic labour market, which seemingly provides

its only source of solace at present. A subsequent speech from RBA Governor Lowe

saw him note that it is hard to see a situation where rates would rise in 2019.

- February's labour market report will be subject to increased scrutiny, and

while one report is unlikely to force the RBA's hand, the trends in both hard

labour market data & vacancy measures will draw even more interest among RBA

watchers, as well as within 65 Martin Place itself.