Virtually no market reaction in yesterday’s Australian Federal Budget, which has seen Fitch and Moody’s quickly out affirming their prevailing AAA sovereign ratings. We haven’t yet heard from Standard & Poor’s. There was a quick dip in AUD/USD yesterday, trading down through the lows seen shortly after yesterday’s poor Retail Sales data, seemingly on the announcement that the current year ‘underlying cash balance’ and ‘net operating balance’ were both a bit more negative than in last December’s MYEFO. But this quickly reversed when the numbers over the forward estimates (through 2021) were seen to ahead slightly better than MYEFO (and indeed the net operating balance is now projected to return to surplus in 2019-20 not 2020-21 – this is as the full effects of the additional revenue seen accruing from the extra Medicare surcharge from 2-2.5% and levy on the banks supports revenue, while additional infrastructure spending holds up the cash balance relative to the net operating balance since the latter only captures recurrent expenditure. The ratings affirmation also helped.