The 10-Year yield spread vs Tsys.......>

AUSSIE BONDS: The 10-Year yield spread vs Tsys went below 30bps causing Aussie

bond futures to rally. Investors taking both the 3-Year and the 10-Years bid

still reminiscing on the latest data for Australia's CPI inflation which lowered

chances of a rate hike this year significantly. The 3-Year future was last at

97.990 and the 10-Year last at 97.330.

- All the RBA seem to focus on is a rise in inflation with a target of 2%, they

wait and wait for a rise and say with a rise in inflation will come a rise in

interest rates, time and time again inflation disappoints, last week coming in

0.2% shy at 1.8%. CBA said: "The RBA are on hold, but not forever. The next move

is a hike, in 18."

- Better than expected Aus Sep trade balances did not move the futures markets,

balances were A$1745mln from A$989mln and expected at A$1200mln.

- Yields are still down the 3-/10-Year spread last at 2.5bp