Aussie Bonds operate around session....>

AUSSIE BONDS: Aussie Bonds operate around session lows. Early dealing saw the

space follow US Tsys lower, with risk appetite being aided by an ABC sources

piece which suggested that US Treasury Secretary Mnuchin has urged Trump to

exempt Canada from the steel & aluminium tariffs.

- Bonds then moved to fresh lows after Australian Q1 GDP topped expectations,

although the household consumption metric was softer than some had forecast.

This allowed the move to be faded, before we ground lower again as a fresh bout

of risk appetite appeared. The cash 3-/10-Year yield differential is trading

around 56.5bp and the AU/US 10-Year spread is around -18.0.

- The liquid white and red bill contracts last trade 1-3 ticks lower, with the

front end pressured after 3-Month BBSW fixed 1.59bp higher at 2.0385%, and as

repo rates tread higher. The move in IRM8 was more pronounced, last trading 7

ticks lower, pressured by the aforementioned factors, with the upcoming expiry

thinning the contract out. The IB strip is relatively unmoved, still pricing a

25bp hike in for October 2019.

- Barclays launched 5 & 10-Year Kangaroo paper.