Aussie bonds descended from the........>

AUSSIE BONDS: Aussie bonds descended from the start of SFE, the 10-Year

recovered slightly towards the end of the session but the 3-Year closed less 3

ticks at 97.830, the 10-Year less 1 tick at 97.140. Aussie bonds had a flat

overnight SYCOM session due to the U.S. National holiday, Columbus Day. The sell

off on SFE came as we heard large blocks of TYZ7 and YMZ7 were given. 

- An extremely lack-lustre index-linked bond auction didn't help the two

contracts either, positive comments on inflation from RBA speakers and big banks

may have discouraged investors, the auction for A$150mln Index Linked bonds came

in 2.6x covered from 3.57x previously covered and with an average yield of

1.2167%, up from 1.1158%. On Wednesday Australian Q3 CPI data is going to be

released and ANZ forecast that CPI will rise by 0.8% q/q, they said "a result in

line with our forecast would see annual inflation rise to 2.0% y/y," also, last

month the RBA's Luci Ellis said the Australian economy has reached 'a turning

point.' 

- Yields are up across the curve, steepening through the session, the 3-/10-Year

spread is currently at 1bp.