On Wednesday ANZ noted that............>

AUSSIE BONDS: On Wednesday ANZ noted that "domestic corporate and financial

issuance has picked up in recent days and a healthy pipeline is expected as

September commences. While the new deals should perform well, this should reduce

spare cash for reverse repo. AUD/CAD cross currency basis is at the highest

levels in the last year. This should see Canadian borrowers come to the AUD

market to issue. We would be cautious on Canadian SSAs for that reason IFC

securities outperformed in SSAs, as coupons and maturities were paid. We noted

the spread to NSWTC was cheap last month. This month sees an IBRD maturity,

which should help its bonds outperform other SSAs and Semis. Despite better

commodity news and GST headlines, WATC has widened against QTC and ACGB. In IRS,

curves and flys are compressed in the front end to mid-curve. We expect outright

yields to rise into the futures roll. The AOFM is also running a little behind

on its borrowing and this may bring a deal with the October maturity

approaching. This should pressure ACGBs to cheap vs swap/EFP. In volatility,

buying of mid to long curve receiver spreads has kept volatility offered."