Aussie bond futures continue to........>

AUSSIE BONDS: Aussie bond futures continue to drift higher in choppy fashion in

line with global trends, touching 97.38 in early trading just shy of the June 19

high. A break above this level would likely trigger a new wave of buying and

cash further doubt over the RBA's willingness to hike short-term rates. 

- The 3s-10s yield spread has continued to edge lower in recent weeks, falling

to its lowest level since April at 53.6bps despite the recent improvement in

economic data relative to expectations. 

- The AU-US 10-year spread currently sits at -26bps having traded in a tight

range in recent session but remains on a downtrend. the 10-year real yield

spread is also testing new lows, currently at -9.4bps. A move back into positive

territory does not seem likely any time soon, particularly with incipient

weakness in US stocks likely to put downside pressure on US breakevens.