Aussie bonds spiked during SFE.........>

AUSSIE BONDS: Aussie bonds spiked during SFE alongside Tsy's after a large block

trade in TYZ7. A source said whilst the volumes are so thin due to holiday any

blocks will move the markets. The block took everything bid and another source

said the jump in Tsy's/Aussie B's was due to USD/JPY 'falling off a cliff,' from

112.9 to 112.5, he said he was sure there was some Japanese real money buying

going on. The oil Abu Dhabi deal was out of the way by the time UST's jumped and

USD/JPY fell too.

- The 3-Year benchmark is currently up 1 tick on the session at 97.830 and the

10-Year is up 2.5 ticks at 97.155.

- The general selling in the markets is said to be continued short covering on

the Powell vs Warsh story but there seems to be a lot of concern over

positioning.

- Yields are all down, 3-/10-Year spread at 1bp.

- A strong Aussie bonds auction earlier, covered 4.46x up from 3.24x previous.