BofAML write "there are some...........>

AUSSIE BONDS: BofAML write "there are some tentative reasons for the RBA to feel

a little more comfortable with the shift to a clear neutral bias. Global

financial conditions have eased and there is some evidence that the housing

market in major cities has started the year in better shape while there are

signs that credit dynamics might be starting to change. Labour data for January

were strong (underemployment down 0.2% to 8.1%) so much worse news is needed to

support lower AU rates and adding to the case for further curve flattening. The

labour data support the case for the RBA to remain on hold for a while yet. If

the early signs of stabilization in housing are confirmed then current pricing

and positioning for possible rate cuts over coming months could be tempered.

There are still significant risks to the outlook, but RBA policy patience and a

new focus on carry could put key support for the 3s-10s curve at 40bps at risk.

We have identified 40-62bps as key levels to watch on the 3s-10s curve."