Stronger than expected Australian......>

AUSSIE BONDS: Stronger than expected Australian retail sales data, coupled with

a wider than expected trade surplus has seen bond futures trade back from highs,

although contracts trade off of knee-jerk reaction lows. The RBA remains focused

on the feedback loop of lower house prices into household consumption, so the

stronger than expected retail sales print will provide the Bank with some

(limited) solace.

- YM last -1.0 tick, with XM down 0.5 tick. YM/XM trades at 48.0, with the cash

equivalent at 42.7bp, as the curve pulls back from early steepest levels after

the recent run higher. The AU/U.S. 10-Year yield spread trades at -65.8bp.

- Bills trade 1 tick lower to 1 tick higher through the reds, on the day, in the

wake of the data.