Bonds operate around SYCOM closing.....>

AUSSIE BONDS: Bonds operate around SYCOM closing levels after a brief tick

higher at the SFE re-open, reversing the recent round of underperformance

against U.S. Tsys, with the AU/U.S. 10-Year yield spread back at ~-27bp, after

Tsys surrendered a chunk of their gains in the NY afternoon. The domestic

3-/10-Year yield differential has flattened by 2.8bp, with cash bonds back into

the swing of things after yesterday's Sydney bank holiday.

- Repo rates have settled into the 40/45bp over OIS area, while 3-Month BBSW

fixed ~0.2bp lower. The Bill strip trades a tick lower to a tick higher last.

- Its a heavy week for the RBA, with the latest MonPol decision later today,

Governor Lowe due to speak on Wednesday & the SOMP due on Friday. The RBA will

leave the cash rate unch today. Despite some downside risks for both inflation &

growth, the Bank will likely maintain its glass-half full approach, with focus

on further progress in reducing unemployment & returning inflation to target.

- IB's are pricing a ~20% chance of a 25bp RBA hike by end of May '19, with 19bp

of tightening priced through '19 (76% chance of a 25bp hike), based off mids.