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

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

trade in TYZ7. The block took everything bid and another source attributed the

jump in Tsy's/Aussie B's 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 2 ticks on the session at 97.840 and the

10-Year is up 4 ticks at 97.170. 

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

on the U.S Powell vs Warsh story but there seems to be a lot of concern over

positioning, longer term, sources say, 'the demand and supply outlook for US

Tsy's is likely to deteriorate, quite sharply in the second half of next year.'

- Yields are all down, spreads widened on the session 3-/10-Year spread at 1.8bp

from 1bp earlier. 

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