The space has had a limited reaction...>

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.