Space struggled on comments from RBA...>

AUSSIE BONDS: Space struggled on comments from RBA Gov. Lowe; many suggested

that he pointed to a higher bar for further easing. I would suggest that he was

perhaps a little more balanced than the initial headlines, maintaining the RBA's

glass half-full approach ahead of Friday's communique. Lowe noted "(yesterday's)

decision also reflects a judgement about the benefits from a further reduction

in interest rates against some of the costs and risks associated with very low

interest rates." However, he cautioned that "if the unemployment rate were to be

trending in the wrong direction and there was no further progress being made

towards the inflation target, the balance of arguments would change." In Q&A he

pointed to a desire for interest rate stability.

- The inaugural tap of ACGB 1.25 May '32 was on the softer side, as the cover

ratio eased & % allotted at high yield jumped vs. initial offering.

- YM -10.0, XM -11.0 come the close, with YM bridging the gap vs. XM's early

losses post-Lowe, allowing the early steepening to be unwound.

- Bills 5-10 ticks lower through the reds.

- Retail sales, NAB biz. confidence & trade data headline tomorrow's docket.