The space clawed back some of its......>

AUSSIE BONDS: The space clawed back some of its FOMC inspired losses, with the

Tsy market initially supporting after the FOMC failed to add a 4th hike to 2018

projections in its dot plot, although the rate path became steeper further out,

with Fed Chair Powell highlighting that there is "no sense in the data that

inflation about to accelerate." This helped put a base on the space. Fresh bids

were noted as the domestic labour market report disappointed & as the domestic

3-/10-Year curve seemingly came under additional pressure from liquidation of

steepener positions.

- 3-Year Bond futures closed 4.5 ticks lower at 97.780, while 10-Year Bond

futures finished unchanged at 97.285, although technical resistance levels saw

bonds back from highs into the close.

- The domestic 3-/10-Year yield differential finished 4.3 bp tighter at 56.8bp,

while the AU/US 10-Year spread finished at circa 17.0bp.

- The white Bill contracts were flat to a tick higher, unwinding their early

session losses. Repo rates & BBSW fixes continue to grind higher as we head into

quarter end.