The shorter end of the curve came......>

AUSSIE BONDS: The shorter end of the curve came under modest pressure after the

RBA reinstated the line that the next move in the cash rate would likely be up,

rather than down, in the minutes of the July MonPol meeting. The RBA also

pointed to quarter end flows as the driving force behind the recent round of

tightening in funding rates, with no mention of demand for Australian

securities, tighter money supply and the move in cross currency basis swaps.

- The longer end was pressured around the pricing of new the 2.75% 21 May 2041

line, with A3.6bn offered at 3.09%.

- 3-Month BBSW fixed some 1.3bp lower today, while longer dated repos fixed

steady, above 2.06%. The lower BBSW fix has supported the front two contracts of

the Bill strip, while the red contracts trade 1-3 ticks lower, in sympathy with

Bonds. The IB strip still only prices around 20bp worth of tightening in by the

end of 2019 (based on yesterday's settlement).

- Foreign issuance has also caught the eye today, as offshore companies looks to

take advantage of the recent moves in basis.

- Participants now look to the domestic labour market report, due on Thursday.