Aussie Bonds continued to drift........>

AUSSIE BONDS: Aussie Bonds continued to drift lower, with XMZ8 registering a

fresh contract low in the process, which accelerated the move as heavy sell

orders came into play.

- The long end underperformed which allowed the domestic 3-/10-Year yield

differential to steepen to ~62.0bp last, while the space underperformed vs.

Tsys, leaving the AU/U.S. 10-Year yield spread at ~-34.5bp.

- 3-Month BBSW fixed ~0.9bp higher today, with funding markets generating

interest heading into quarter end. The Bill strip last deals 1 to 4 ticks lower.

- Traders have spoken about a ~10.5K buyer of IBF9 in the overnight session.

Most traders have suggested that this is merely a hedge, but some traders have

suggested that this is a cheap play on the possibility of the RBA delivering a

rate cut in December.

- Traders now look to a A$1.5bn auction of the 2.50% 21 May 2030 Bond on

Wednesday.