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

AUSSIE BONDS: MNI MARKETS ANALYSIS: Aussie Bills Weekly Update - August 02, 2019

- The curve has flattened again this week, although the slightly better than

market expected Q2 CPI data, which was largely in line with the RBA's own

forecasts coupled with the Fed messaging allowed IRU9 & IRZ9 to underperform,

although the modest downtick has been quickly reversed on the back of the latest

round of trade war escalation.

- 3-Month BBSW printed fresh lows until Wednesday, but hasn't managed to extend

on that, yet. 3-Month BOB spreads finished the week little changed on the back

of the aforementioned dynamics, after edging lower through Thursday.

- All eyes on the RBA decision next week. Q2 CPI has removed any pressure that

the RBA may have been feeling re: adopting a fully dovish bent, although their

take on the latest round of trade war escalation and the SoMP will be of

interest.

- OIS price 35bp of easing through year end. This is little changed vs. levels

observed earlier in the week, although chances of cuts at the Aug meeting have

been wound out to ~10% from over 30% at one point earlier this week.