Westpac note that "while Tuesday's.....>

AUSSIE BONDS: Westpac note that "while Tuesday's RBA Board meeting will not

deliver a shift in pol, Friday's SoMP will include an update out to Dec '20. We

expe. no change to their above trend GDP exp. (3.25% in '18 & '19, 3% in '20), &

core inflation forecasts (1.75% in '18, 2% in '19 and 2.25% in '20). So the main

focus will be on unemployment, where the RBA is likely to lower its expected '20

forecast to 4.75%. The latter is below the accepted NAIRU and as such will spark

some renewed debate about whether wage pressures are set to rise near term. That

is not Westpac's view. A slowing of recent employment strength is one reason why

we are forecasting unch. MonPol into '20. From a market perspective, bond

futures have quickly given up some of their recent gains, led largely by the

correction in US Treasuries. While the bill strip outperformed in the post-CPI

rally last week, there appears little appetite to significantly alter RBA risk

rewards and pricing is relatively stable. Outright yields are in the middle of

their recent ranges, while the curve has both bull and bear steepened in recent

trading sessions. Should the 3- 10yr futures spread move back above the 60bp

level, we will again be looking for opportunities to fade the move."