On Tuesday Barclays recommended........>

AUSSIE BONDS: On Tuesday Barclays recommended "paying AUD 1y IRS at 1.56%,

targeting 1.80% with a stop-loss at 1.45% (carry and roll is +8bp per quarter).

Despite the recent improvement in domestic and global data, Australian rates

markets continue to imply about 40bp of cuts over the next year - largely

unchanged from two-weeks ago. Our expectation of an unchanged Fed over the

coming year, versus market pricing of 24bp of cuts, should also support higher

Australian rates given the historically positive relationship." Barclays think

the "case for RBA rate cuts remains incomplete. Econ data have turned more

positive & continued job growth, amid already low interest rates, is likely to

support a recovery in consumption this year. Q1 inflation weakness is likely to

be temporary, and underlying inflation should remain fairly stable. While house

prices have continued to decline, a pickup in auction clearance rates suggests

the market may be finding a base, and the strength of housing's wealth effect in

Australia remains unclear. Recent RBA communication has appropriately emphasized

a data-dependent approach given conflicting domestic activity signals. The

external outlook has also improved in recent months."