ANZ note that "3y and 10y AUD swap.....>

AUSSIE BONDS: ANZ note that "3y and 10y AUD swap spreads have gone negative. The

main factor behind this has been the fall in BBSW relative to repo. The rush of

ACGB supply and expectations that this will continue have also cheapened bond to

swap, particularly at the long-end. The US's experience tells us that even when

central banks massively expand their balance sheets, fundamentals still matter

for swap spreads. We think AUD spreads could remain around current levels for

some time, while the EFP box could also remain negative. There will be a

directional element in swap spreads, however, especially at the front end. A

global reflation trade in the second half of the year could quickly see 3y swap

spreads at least move back into positive territory given the way yield curve

control (YCC) operates."