Aussie bonds drifted lower in SFE......>

AUSSIE BONDS: Aussie bonds drifted lower in SFE trade, likely pressured by the

continued & more notable sell off in JGBs. XMZ9 registered fresh contract lows.

Elsewhere, ANZ have put out a buy recommendation for cash 10s targeting 0.90% in

yield terms, noting that "with the market now pricing less than a full 25bp rate

cut, we think the shift in market expectations for the RBA is likely complete,"

with cash 10s yielding close to the top of their projected range for the

remainder of 2019. YM closed -3.0, with XM -7.0.

- The latest round of ACGB May 2030 supply saw solid enough demand, while there

were reports that Qantas is planning a snr A$ 10-Year benchmark offering.

- Elsewhere, several desks that we speak to have outlined various rounds of

interest in Aussie outperformance vs. U.S. rates trades over the past 24 hours.

This coincided with the AU/U.S. 10-Year yield spread testing & failing at the

top of the downtrend channel that has been in play since September 2017.

Although, it is worth highlighting that the spread sits in the middle of the

longer-term downtrend channel that has been in play since the end of 2010.

- Bills finished unchanged to 2 ticks lower through the reds.