Aussie bond futures were well bid......>

AUSSIE BONDS: Aussie bond futures were well bid Tuesday, catching up to the

events from the long holiday weekend. YM finished +8.5, with XM +10.5, recent

flattening theme continued, YM/XM shut 2.0 flatter at 34.5, off session flats.

- Soft headline NAB biz survey readings provided some impetus, allowing

contracts to trade through SYCOM highs, before edging back off peaks. NAB noted

that "confidence weakened, falling 2pts to -2 index points, the lowest read

since mid-'13. While broadly stable, fwd looking indicators do not imply a

material improvement in the near term. Forward orders remain weak & capacity

utilisation is just below avg. Capex has pulled back over the year, and is now

also below avg. A bright spot remains the employment index, which at +4 index

points is above avg & implies reasonable ongoing employment demand....

Notwithstanding the decline in confidence, the impact of the bushfires (which

began in late December) is not yet apparent in these results. We will closely

watch the results of the January survey for any indication of the impact of the

fires on the business sector." Bills shut 4-7 ticks higher through the reds.

- Domestic CPI headlines Weds. IBs price a ~30% chance of an RBA cut in Feb.