Bond futures trade off of highs,.......>

AUSSIE BONDS: Bond futures trade off of highs, after the early part of the

session saw the space underpinned by the broader risk-off flows, which had no

clear catalyst (a weaker Nikkei 225 seemed to provide the initial impetus), with

soft Chinese activity data adding a fresh bid in the middle of the session.

YM/XM last 47.25, with the cash 3-/10-Year yield differential last ~47.3bp. This

area has acted as a double bottom for the cash curve over the last 12 months and

held again today. AU/U.S. 10-Year yield spread last -44.5bp.

- White and red Bills trade 2 tick lower, to 1 tick higher last. Funding matters

have pressured the front end, with the reds more responsive to the risk off

flows observed earlier in the day. Focus continues to fall on year end matters

in the shorter dated rates space, with the RBA's 31-day reverse repo operations

conducted at 2.228% today, on a healthy enough A$2.22bn. 3-Month BBSW set 1.68bp

higher at 2.0166% today.

- Next week will bring the RBA's Dec meeting minutes on Tuesday, ahead of next

Thursday's AU labour market report. Markets also eye the AU gov't MYEFO, due

Monday.