Westpac write "this week's data........>

AUSSIE BONDS: Westpac write "this week's data highlight is surely the Q4 CPI. We

are forecasting a core read of 0.3%qtr/1.6%yr. This shouldn't be enough to

impact mkt pricing which has downplayed inflation as a factor in RBA's thinking.

The downbeat domestic news continued with NAB Business survey falling sharply to

end '18. When combined with consumer sentiment which fell to begin 2019, clearly

an unsettling development for the RBA. Bill Evans expects RBA to downgrade SOMP

growth forecasts to 3% in '19 & '20. This is still above are own forecasts of

2.6% for both years & likely to ensure the official view that the next move in

rates will be up is maintained. With inflation unlikely to provide a catalyst,

this week local markets will be driven by FOMC as well as developments in

funding markets & US-China trade headlines. However, the following week is

shaping up as critical for the domestic market with the Banking Royal Commission

report February 4th, RBA first meeting of the year 5th, Governor Lowe speaking

on the 6th & then SOMP on 8th. These factors have pushed futures to the top of

their '19 ranges & given our view of RBA on hold, we are better sellers at

current levels."