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

AUSSIE BONDS
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
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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