BofAML believe that "the nominal and...>

AUSSIE BONDS: BofAML believe that "the nominal and real curve should retain a

steepening bias as term premium reprices higher through the combination of

fiscal support by the government, strong momentum for growth and the more

reactive policy approach by the RBA. The repricing of wider breakevens would add

to the backup in long-end nominal yields. Domestic factors argue for higher

yields but we also acknowledge risks from global curve flattening and

flight-to-quality. If repo rates moved closer to 2.3% on a sustained basis then

this would also temper AU steepening pressures. We remain constructive on

inflation breakevens across the curve and further progress on inflation is a

precondition for any policy adjustment. The aggressive weakening of breakevens

that were triggered by February's global risk-off episode now appears overdone

especially in cross-market relativities (Chart 13). Inflation markets are

underpricing inflation risk as spare capacity is being absorbed and fiscal

policy is turning expansive. Currency pass-through from the weaker AUD has also

not been reflected in inflation markets."