There was very little reaction in......>

AUSSIE BONDS: There was very little reaction in the space to the dinner time

address from RBA Governor Lowe. Lowe said that after holding rates steady for

more than two and a half years, the decision (to cut rates) was prompted by an

"accumulation of evidence" on two points: inflationary pressures are subdued and

will remain so, and there is "significant spare capacity" in the labour market.

Looking ahead, Lowe suggested that "it is not unreasonable to expect a lower

cash rate ... Our latest set of forecasts were prepared on the assumption that

the cash rate would follow the path implied by market pricing, which was for the

cash rate to be around 1% by the end of the year." Lowe said the RBA outlook

depended largely on conditions in the labour market, and whether one cut would

provide sufficient stimulus.

- The space ultimately drifted lower on SYCOM, taking cues from Tsys. YM last

-0.5 tick, XM -2.0 ticks. YM/XM trades at 40.5 ticks, with the cash equivalent

at 39.0bp. Bills trade unch. to 1 tick lower through the reds. The AU/U.S.

10-Year yield spread deals at -61.4bp.

- Focus now moves to GDP data, along with ACGB 2030 supply.