Aussie Bonds remain in a narrow........>

AUSSIE BONDS: Aussie Bonds remain in a narrow band, in the upper end of the

recent range. The domestic 3-/10-Year yield differential & AU/US 10-Year yield

spread continue to operate around familiar levels.

- 3-Month BBSW fixed 1.8bp lower today, a 5th consecutive lower fixing, as FY

end pressures alleviate. This will please the RBA, after it noted that

"short-term wholesale interest rates have increased over recent months. This is

partly due to developments in the U.S., but there are other factors at work as

well. It remains to be seen the extent to which these factors persist." The

white & red Bill contracts last deal unch. - 2 ticks higher.

- RBA's Heath took to the wires overnight, and noted that recent econ data has

been positive, while she is more confident re: a sustainable pick-up in

non-mining investment. She also noted that the Bank is paying close attention to

house prices owing to effects on household wealth.