Bond futures sit just off..............>

AUSSIE BONDS: Bond futures sit just off Wednesday's late SFE session highs that

were inspired by Westpac raising its standard variable home loan rate by 14bp to

5.38%, Westpac stated that the rate move reflects a sustained increase in

funding costs. The potential policy feedback here, especially if some of the

other large financial institutions follow Westpac's lead, is that households

will feel the pinch from higher mortgage payments, crimping household

spending/consumer optimism, leaving the RBA on hold for longer.

- The move led to outperformance in AU Bonds, with the AU/U.S. 10-Year yield

spread last at ~-31.5bp, while the domestic 3-/10-Year yield differential

continues to steepen, last ~55.5bp.

- The Bill strip sits unchanged to 2 ticks lower, easing a touch after the late

spate of buying that was observed in Wednesday's SFE session. IBN9 prices a mere

~7% chance of a 25bp RBA rate hike by the end of July 2019.

- Today's AU CapEx release dominates the domestic docket this week. Participants

are also on the lookout for any further mortgage rate moves from the remaining

tier 1 AU banks after Westpac's move yesterday.