ANZ note that "funding costs have......>

AUSSIE BONDS: ANZ note that "funding costs have fallen from their peak in July,

but remain elevated. BBSW has eased around 12-13bp from the high at the end of

June. Repo rates are a little stickier and have recently risen. Out of cycle

rate hikes from smaller banks have commenced and cover around a quarter of

mortgages. The major banks remain sidelined. We do not see a large range for

EFPs, and would lean against a widening short term, as outright rates are in the

bottom quartile of the year. SSA issuance has slowed sharply during the Northern

Hemisphere summer. YTD issuance is now the same as this point in 2017. Semis

issuance activity has been concentrated in the 10-year bucket in the FYTD. This

is likely to continue, given relatively low rates and tight spreads. Cross

currency basis levels are elevated as Kangaroo flow remains light. August is a

seasonally soft period for basis. The AUD/USD 5s/10s curve is around average

levels suggesting carry traders are less likely to receive the market. Single

currency bases are near recent lows. Issuers into AUD are enjoying the highest

cross currency basis levels since late 2014, but this has not encouraged

issuers. Coupons from EIB, KfW and IADB are notable in August."