Aussie Bond futures operated on........>

AUSSIE BONDS: Aussie Bond futures operated on healthy volume during SYCOM trade,

Thursday into Friday, undergoing a little bit of a roller-coaster ride, before

finishing virtually unchanged vs. the SFE close, at similar levels to where we

currently operate. Solid volume crossed at 97.905 in YMZ8 post-AU retail sales

(modest beat 0.3% M/M vs. exp. 0.2%), but there was little follow through.

- There was little reaction in the space to comments from RBA's Heath, who

focused on theoretical aspects of the labour market.

- The latest AOFM auction & schedule for next week (10+ Year paper and an I/L

line) were well digested, with the space drawing support from news that there

will be no new Bond lines introduced before the government's MYEFO.

- The AU/U.S. 10-Year yield spread last deals at -48.0bp, unwinding a couple of

bp from yesterday's AU outperformance, with the domestic 3-/10-Year cash yield

differential last dealing 1.5bp steeper at ~69.5bp.

- Funding pressures have eased at the start of the quarter, which has played

into the basis space. There was little reaction in the Bill strip to today's

3-Month BBSW fixing (-1.03bp), last trading 1 tick higher to 1 tick lower.