The dust is settling after the.........>

AUSSIE BONDS: The dust is settling after the awaited announcement of the RBA's

further monetary policy steps. Australia's central bank slashed the cash rate by

25bp, bringing it to its effective lower bound of 0.25%, and pledged not to

raise it until "progress is being made towards full employment and it is

confident that inflation will be sustainably within the 2-3% target band." The

RBA also said it will target 3-year yield at around 0.25%, with daily purchases

on the secondary mkt. The announcement triggered aggressive twist steepening

across the curve, with 10-year yield posting a record, 128bp knee-jerk spike. We

suspect some may have been caught off guard by the fact that the RBA chose not

to copy the BoJ's targeting of 10-year yields, instead focusing on 3-years.

- As we type, yields sit -20.1bp to +39.2bp in cash trade, twist steepening

evident. Similar dynamics observed in Aussie bond futs; YM +9.0 ticks, with XM

-41.5 after posting a sharp, quickly pared drop. Bills trade 1-10 ticks higher

through the reds.