The space had a limited reaction to....>

AUSSIE BONDS: The space had a limited reaction to the latest RBA MonPol decision

which saw the Bank modestly upgrade its GDP growth forecast for '18 & '19, while

it trimmed its longer run unemp projection to 4.75% following the latest labour

mkt report.

- The fact that the first and final paragraphs in the statement remained

unchanged is the key, the uptick in GDP estimates & lower unemployment forecast

are seemingly negated by the CPI/wage outlook, with inflation to "be a bit

higher" than 2.25% in 2020 (most recent SoMP has it earmarked at 2.25%, could be

deemed hawkish but the fact that it refers to a little above shows any tweaks in

Friday's are likely to be gradual), and wage growth still seen as gradual.

- 3-/10-Year cash yield spread 0.5bp flatter at 65.3bp last, AU/U.S. 10 Year

yield spread at -47.3bp.

- Bill strip volume has been light, contracts 1 tick lower to 1 tick higher.

- As a reminder, it is Melbourne Cup day, so expect desks to empty and limited

liquidity as a result