VIEW: In the wake of Friday's AOFM.....>

AUSSIE BONDS: VIEW: In the wake of Friday's AOFM release re: planned

syndications, TD Securities noted that "the fact that 3 of the 5 new lines are

10yr+ in maturity should drive long end underperformance near term. Further,

news of a new 5yr Australian Bond futures contract driving demand for bonds in

the belly of the curve, suggests near term steepening in the 5s10s, 5s30s &

10s30s segments of the ACGB curve. ACGB 03/47s are 3.8bps rich to the fitted

ACGB 0-curve model. We note this is not statistically sig. based on 6m z-scores.

In a historical sense, the ACGB 03/47s have been trading on the richer side of

fair since the start of this year. We note this line was 6bps rich to fair on

1st Jul. The news on the new 30yr is likely to drive underperformance in the

near term. In a global context, the ACGB 10s30s curve is the steepest compared

to peers. The deviation from fair suggests there is scope for the ACGB 10s30s

curve to steepen a little more in the near term. However as our global

colleagues outlined, early indicators suggest the rebound may be stagnating. As

such global curve steepening is likely to be capped making the long end ACGB an

attractive point for yield hungry investors."