Aussie Bonds ticked higher,............>

AUSSIE BONDS: Aussie Bonds ticked higher, supported by heavy buying activity in

YMZ8, drawing additional support from month-end extension flows, as yields

softened by 1.0-2.0bp across the curve.

- The domestic 3-/10-Year domestic yield differential last trades unch. at

~61.0bp, with the AU/U.S. 10-Year yield spread at ~-38.0bp last, as U.S. Tsys

underperform local Bonds.

- The AOFM's issuance schedule for next week is quite light, with 2 Bond

auctions of A$500mn a piece, covering 1 YMZ8 basket constituent & 1 XMZ8 basket

constituent.

- The uptick in Bonds, along with 3-Month BBSW fixing 0.8bp lower and an uptick

in bank deposits in August (for a second consecutive month according to the

APRA) has supported the Bill strip, which trades 1 to 2 ticks higher last, as

funding pressures eased a touch at quarter end.

- Participants now look to next week's RBA MonPol decision, AU trade data &

retail sales. It is also worth noting that RBA's Heath will make an appearance

next week.