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 back from Wednesday's highs (which represented the highest

level seen 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 -20bp. 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 now back from session lows. 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."