MNI MARKETS ANALYSIS: Aussie Bills.....>

AUSSIE BONDS: MNI MARKETS ANALYSIS: Aussie Bills Weekly Update - July 26, 2019

- Aggressive outperformance for IRZ9 & IRH0 as RBA easing bets ratcheted up this

week. The initial trigger was a more aggressive RBA call from Westpac, which

also included a lower terminal rate f'cast. This was followed up by RBA Gov.

Lowe noting that we should "expect an extended period of low interest rates" &

that "it is highly unlikely that we will be contemplating higher interest rates

until we are confident that inflation will return to around the mid-point of the

target." Lowe reiterated that the RBA stands ready to ease further if needed.

- On the inflation target itself, Lowe noted that he is "reasonably confident

that the Treasury will agree on keeping the inflation target" as is. Lowe also

noted that there "might be some drafting changes in the wording of the monetary

policy agreement." We would suggest that this would likely be superficial, as

was highlighted by the local press.

- 3-Month BBSW printed a series of all-time lows, with the 3-Month BOB spread

edging higher.

- Q2 CPI headlines the local docket next week.