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The space has had a limited reaction...>

AUSSIE BONDS
AUSSIE BONDS: The space has had a limited reaction to the latest RBA MonPol
decision which saw the Bank leave its cash rate unchanged as expected, 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 seems to be 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 (the most recent SoMP had it earmarked at 2.25%,
could be deemed hawkish but the fact that it refers to a "bit" above shows any
tweaks in Friday's SoMP are likely to be limited), wage growth still seen as
gradual. No notable language tweaks re: housing market/external risks.
- Futures stuck to a tight range on Melbourne Cup day.
- 3-/10-Year cash yield spread 1.5bp flatter at 64.8bp last, AU/U.S. 10 Year
yield spread at -47.6bp.
- Bill strip volume has been light, contracts 1 tick lower to 1 tick higher,
3-Month BBSW set ~1.1bp higher today.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com