VIEW: J.P.Morgan "take a look at the...>

AUSSIE BONDS: VIEW: J.P.Morgan "take a look at the AUD 3s/s10s par curve. Over a

longer term horizon, we note that the curve has broken a key trendline this

year. This biases us towards a steeper curve over the medium term. But near

term, our model suggests that the curve is a little steep to fair value (around

one standard deviation). We would look to fade any further steepening to the

+75bp level; this would represent a two-sigma deviation assuming no material

change in fair value. Moreover, our colleagues in USD and EUR rates strategy see

fundamental reasons for steeper curves in US and European rates markets; and

while the beta of moves in the AUD 3s/10s curve to global curves is around 0.3,

we note that flatteners appear to be the more widely subscribed position

locally."