Aussie Bonds have benefitted from......>

AUSSIE BONDS: Aussie Bonds have benefitted from safe haven flows on the back of

the latest round of U.S. protectionist measures employed against China, with

China's MOFCOM noting that it will retaliate. The space has eased from session

highs as markets realised that such measures had been previously outlined, but

the speed of the implementation of additional protectionists measures has left

safe haven assets bid.

- The AU/US 10-Year spread has narrowed to ~-22bp in recent sessions, aided by

the announcement of fresh longer dated AOFM issuance scheduled for next week,

but still trades only a touch above the recent cycle low. The domestic

3-/10-Year yield differential continues to trade either side of 55bp.

- The risk off flows have led to solid enough demand in the front end of the

Bill strip with the white and red contracts last trading 1-2 ticks higher,

gaining additional support after 3-Month BBSW fixed some 2.5bp lower today,

although most contracts are a tick or two off of best levels in line with Bonds.

- The remainder of the week provides little in the way of domestic risk events,

so focus is likely to remain on the global risk environment.