NAB write "we lower our bond yield.....>

AUSSIE BONDS: NAB write "we lower our bond yield and swap forecasts to reflect

NAB's change of RBA call for two rate cuts in 2019. Front end bond yields are

likely to re-test 2016 record lows - we see the 3y yield reaching 1.30%. In the

near term, a significant further rally in front end rates will require weaker

economic data. Short end funding spreads are a key swing factor, changing the

relationship between front end yields and the cash rate compared to previous

cycles. We continue to see the US 10y yield as range-bound and view global rates

risks as more evenly balanced than for Australia. ACGB 10yrs have less room to

rally than the front end, but we still see the Aus-US 10y spread reaching new

lows of -80bp to -90bp."