Twist flattening evident Friday, YM....>

AUSSIE BONDS: Twist flattening evident Friday, YM shut -0.5, while XM was +1.5.

This saw YM/XM finish 2.0 ticks flatter at 37.0. The move was aided by Westpac

joining the deluge of analysts who pushed back their RBA cut calls in the wake

of yesterday's labour mkt data, they now look for 25bp cuts in Apr & Aug (prev.

Feb & Jun), but reiterated that they expect "that some time after reaching the

0.25% lower bound the RBA will move to a modest form of QE entailing a A$2.5bn

monthly ACGB purchase program." Flash PMI data was soft reiterating known areas

of worry i.e. consumer constraint, residential construction & biz investment, as

well as bushfire induced worry. However, it wasn't completely downbeat: "Key

leading indicators like new orders and employment are showing a notably stronger

result... And expectations about future business remain at encouraging levels."

- No bond issuance from the AOFM next week, but the AOFM is going back to the

well in ACGB 1.25% 21 May '32 after this week's strong opening. The AOFM needs

to get the bond up to size, some suggest that it will join the XMZ0 basket.

- Bills shut -1 to +1 through the reds, fronts underperformed, with some selling

in IBG0 on Westpac's RBA call change. Monday is a national holiday in Australia.