Core FI has drifted back from highs....>

BOND SUMMARY: Core FI has drifted back from highs after the lack of escalation

in tensions at the Sino-U.S. diplomatic summit, alongside a seeming want to work

together (albeit with some issues flagged and a lack of concrete steps

outlined), which took some of the edge off a risk averse Asia-Pac session. The

John Bolton "revelations" re: President Trump made late Wednesday, continued

North Korean sabre rattling/reported movement into the DMZ and Sino-U.S. tension

surrounding the Uighur Muslims in China's Xinjiang province all weighed on the

broader risk backdrop in early trade.

- T-Notes +0-05+ at 138-24+, with yields 0.6-4.5bp richer in cash trade as the

curve bull flattens.

- JGB futures last +6, with a tepid 5-Year auction noted, and some light

underperformance in the belly for most of the session, although the long end is

now relatively flat vs. that zone of the curve.

- Weaker than expected Aussie labour market data provided the Aussie bond space

with another reason to go bid, with flattening evident for futures, YM +0.5, XM

+3.5.