Aussie Bonds have struggled to turn....>

AUSSIE BONDS: Aussie Bonds have struggled to turn bid after tracking U.S. Tsys

lower on SYCOM, with a bout of heavy selling orders in YMZ8 pushing the contract

below technical support, adding fresh weight to the complex, and promoting some

modest curve flattening. The move extended on the back of comments from Chinese

Premier Li, who noted that China will not devalue the Yuan to stimulate exports.

Bond futures operate at worst levels last.

- Svenska Handelsbanken were the latest to jump on the Kangaroo issuance

bandwagon, launching 5-Year A$ paper.

- 3-Month BBSW fixed largely unchanged today, up a mere 0.06bp, while RBA OMO

rates hit the highest level since Mar 29, jumping to 2.178%. Quarter end

pressures seem to be playing out more in the basis & OMO space than in BBSW this

time around. The Bill strip last trades 1-6 ticks lower.

- The recent selling pressure has allowed the space to play catch-up to Tsys,

with the AU/U.S. 10-Year yield spread at ~-35bp last.

- RBA's Kent offered little fresh insight into MonPol in an address that he made

today, as he focused on dynamics of the funding markets.