ANZ highlight that "AUD front end......>

AUSSIE BONDS: ANZ highlight that "AUD front end basis and funding markets stayed

volatile in July, after a significant move in June. Forward implied yields have

fallen in recent days, but we note the widening between 2 and 3 month forward

implied yields as the market steels itself for another bout of funding pressure

in September. The AUD/USD 3m front break had a 40bp round trip over the month,

starting at 14bp, trading to 53bp and now sitting at 25bp. The AUD spot has

settled which should take some pressure off cross currency basis collateral

repatriation. In the longer end, sticky levels for tenor funding will make

issuance into foreign markets more expensive. Foreign banks switching their

(predominantly) USD balances to AUD for loans becomes more expensive, making

them less competitive locally."