VIEW: On Friday Bank of America........>

AUSSIE BONDS: VIEW: On Friday Bank of America noted that "in our view,

risk-reward favours near-term tactical 3s-10s curve steepeners. The combination

of the RBA beginning to slow nominal bond purchases, unprecedented government

borrowing and the collapse in long-end breakevens provides scope for nominal

3s-10s curves to push steeper. The Bank has reduced daily bond purchase volumes

(as we had expected) to around AUD 1bn from 5bn (20th March). We think RBA bond

purchases of around AUD 5-6bn per week is a more sustainable pace over the next

6-months. We see value in 3s-10s futures curve steepeners around 45-50bps and

target a move towards 70-75bps. Risk is from a deterioration to market

functioning that prompts a ramp-up of long-end RBA purchases."

- Also, "the aggressive repricing of nominal rates has mostly driven the

repricing in breakevens. The shock to global demand (and oil prices) means there

is now risk of a soft Q2 CPI print that will hurt carrying dynamics for

front-end linkers. We think it is more likely that the AUD breakeven curve moves

steeper (rather than flatter) and unconventional RBA measures should help to

improve the medium inflationary outlook."