Monday saw Westpac pay the July '19....>

AUSSIE BONDS: Monday saw Westpac pay the July '19 RBA meeting OIS vs. receiving

the Nov '19 RBA meeting OIS. Westpac entered the trade at -18.3bp, with a target

of -35bp and a stop at -10bp. "On Feb 21, Westpac updated its RBA call from on

hold to two 25bp cuts in '19 - the 1st in Aug, followed by a 2nd in Nov. Up

until a week ago market pricing was close to consistent with that view, but has

moderated since. A major catalyst for that adjustment was Deputy Gov. Debelle's

address on The State of the Economy. Debelle did not appear to support mkt

pricing for rate cut(s) & in the Q&A noted that that "our exp. is that we will

see decent growth in the economy, so we won't have to get to that point [of

cutting rates]. To the contrary, Westpac is of the view that Australia's economy

will grow at just 2.2% in '19 & '20 - a level that is below trend & would

warrant rate cuts in H219. Additionally, Westpac exp. an uptick in unemployment

to 5.1% from 5.0% in Thursday's employment data, again strengthening the case

for easing from the RBA. Timing for Aug is supported by opportunity for a full

explanation of reasons behind the decision in the Aug SOMP, as well as 2 more

inflation prints to confirm the further widening of the output gap."