On Wednesday RBC "revised down our.....>

AUSSIE BONDS: On Wednesday RBC "revised down our AU bond yield forecasts largely

extending our key fixed income strategy of recent years as we look for further

AU cross market performance and a well anchored front end aside from periods of

funding stress. With the RBA set to remain on hold for longer, our RBA/FF's

profile now moves further negative for longer underpinning a revised 10y AU/US

target of -60bp in H119. Accordingly, we retain our 5y/5y AU/CA IRS tightener

and pull in the stop, take early profit on our received 3y EFP position, and

close out our ACGB 3/10s steepener for a small loss. Some underperformance of

the ACGB 2047s recently looks opportune and we enter a long 30y AU/US position.

The AU repo market saw another large rise in activity, but interestingly some of

the rise in offshore borrowing has been offset by greater lending via

reverse-repos. News that Labor would commit to a 75c GST floor provides a good

reason to lean against recent underperformance. We enter a WATC Oct-22s vs ACGB

Jul-22s narrower at 36.75bps."