Bond futures have edged higher on......>

AUSSIE BONDS: Bond futures have edged higher on the back of a softer NAB

business survey and weaker than expected housing finance data. The connotations

of soft housing finance data are quite obvious, but we will take a closer look

at the NAB survey. NAB noted that the "capacity utilisation fall largely

reflected the reversal of an errant high read in mining last month. The trend

for cap use is worrying as the question includes firms' use of both plant &

equipment, and labour, and has proven a useful lead indicator of unemployment in

the past. While the employment question remained stable at 5, it's worth noting

that four sectors are now recording negative employment reads over most of the

past 3 months: construction, manufacturing, retail & wholesale. This accords

with the weakness evident in other indicators of residential construction and

retail. Labour costs and purchase costs ticked up, but final/retail prices were

slightly weaker. There remains little sign of any momentum in price growth."

- YM last trades unchanged., with XM also unchanged. YM/XM trades at 42.25, with

the cash equivalent at 43.4bp, modestly steeper on the day.

- Bills trade 1 tick lower to 1 tick higher through the reds.