The space digested a solid 3-Year......>

AUSSIE BONDS: The space digested a solid 3-Year futures basket constituent

auction, with 3-Year futures last a tick back from the early highs at 97.89 (+2

ticks on the day) & 10-Year futures exhibiting similar price action, last at

97.155 (+ 2 ticks). The cash equivalents are yielding 2.081% (-2.0bp) & 2.857%

(-1.6bp) respectively.

- From a technical perspective the 3-Year future's 97.790 support level

reconfirmed significance with yet another dip back towards this level running

into support and the resulting bounce seeing immediate pressure back on

97.890-905 where the 100-DMA is noted.

- The domestic 3-/10-Year curve, sits at 77.0bp last, 1.1bp steeper on the day,

while the AU/US 10-Year spread, remains in negative territory at a discount of

7.5bp.

- ANZ highlight one potential catalyst that could drive the spread moving

forwards, in that "the AOFM has completed nearly 75% of its gross requirement",

and suggest that "this should remove pressure on the longer end."