Aussie Bond futures have stuck to a....>

AUSSIE BONDS: Aussie Bond futures have stuck to a tight range, with the size of

the upcoming auction of the new May '30 Bond sitting in line with exp. 10-Year

futures have eased from Wednesday's highs (which represented the highest level

printed since early Apr) as the issues surrounding the Italian political sphere

have plateaued. With the RBA on hold & a lack of meaningful domestic economic

developments apparent, the AU/US 10-Year spread continues to operate around -20.

Sources also note that real money has extended out into the 10-Year sector which

will add further support to the longer end. 3-Month BBSW fixed around 0.65bp

higher, with Bill strip a little softer on the day. The RBA OIS curve is pricing

in ~4bp worth of hikes over the next 12-months & our RBA watcher Sophia

Rodrigues has noted that "downside risks to the Australian economy are growing

and unless the Reserve Bank of Australia changes its forward guidance, it runs

the risk of misguiding or making incorrect policy choices ." Economists at TD

Securities have revised their forecast for the first hike in the Reserve Bank of

Australia's cash rate in this cycle, pushing it to May 19 from Nov 18, as "the

sound of rate hike capitulation has been deafening."