The space is back from session highs...>

AUSSIE BONDS: The space is back from session highs with YMM8 last at 97.870

(+2.5 ticks) with XMM8 last trading at 97.2625 (+2.25 ticks).

- The domestic 3-/10-Year spread last trades at 67.6bp, while the AU/US 10-Year

spread hovers around -8.5bp, in from session wides of around 10.0bp.

- The space followed Tsys higher on SYCOM as US retail sales disappointed and

equities moved lower, with bonds softening in early SFE dealing before a US

10-Year block buyer helped stiffen up demand for fixed income assets following

hardline comments on China from Peter Navarro, US Director of Trade and

Industrial Policy, who told Fox that "the next thing on the chess board is to

deal with... China stealing our technology." Adding to incoming NEC chair

Kudlow's anti-China rhetoric.

- Broader risk aversion has abated for the time being with stocks off of worst

levels & USDJPY back towards 106.00.

- The short end came under pressure as 3-month BBSW fixed 2bp higher. IRM8

trades 2 ticks lower, while the red contracts are 1-2 ticks higher.