The space followed US Tsys higher......>

AUSSIE BONDS: The space followed US Tsys higher amid risk-off flows as US

President Trump ordered the US Trade Rep to identify an additional $200bln in

Chinese goods for tariffs at a rate of 10%, this is a larger nominal amount than

had been expected. A fresh leg higher was observed after China vowed to take

strong countermeasures if the US issues a new sanctions list. The domestic

3-/10-Year yield diff & AU/US 10-Year spread continue to grind flatter/more

negative respectively.

- The mins from the RBA's Jun meeting were virtually ignored. They appeared

broadly optimistic but omitted the guidance that the next move in the cash rate

is more likely to be up, rather than down. The RBA merely said that "the Board

judged that holding the stance of monetary policy unchanged would be consistent

with sustainable growth in the economy and achieving the inflation target over

time." The Bank also stated that "further progress in the period ahead in

reducing unemployment & returning inflation to the target was therefore

expected, although this progress was likely to be gradual."

- The white Bill contracts have underperformed as repo rates remain elevated.