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, holding gains to the end of the session for the benchmark

contracts. 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 last at 98 and the 10-Year last at 97.3250. 

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

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." Tomorrow brings hotly anticipated Aus Retail Sales, forecasted to

rise, so we'll look to that as well as the AOFM auction of 2021 bonds.

- 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 saw another day of decline, the 3-/10-Year spread last at 2bp coming

down from 2.5bp seen earlier on SFE.