VIEW: RBC note that "it's early days...>

AUSSIE BONDS: VIEW: RBC note that "it's early days to draw firm conclusions on

market impact (of the recently announced 5-Year bond future), but at the margin

a new future should support mid-curve bonds, which traditionally have traded a

little cheap to the 3y and 10y basket areas as measured by curve shape and

spread to swap. This might stop bonds rolling out of the 10y basket from trading

cheap and also smooth out the outperformance of bonds entering the 3y basket.

Overall, we expect that Apr-26s through to Apr-29s will likely outperform

further over the next 3-6 months in anticipation of the new contract. This

should see further flattening pressure on 2-5s (we are running this trade in

swap, but not currently in bond) and steepening pressure on 5-10s, though not

enough to overwhelm global-led movements. We'd also expect a substantial shift

of open interest from the 3y contract to the new 5y contract given that the

RBA's yield curve control has dampened volatility in the front end of the

curve."