VIEW: Westpac note that "RBA...........>

AUSSIE BONDS: VIEW: Westpac note that "RBA Governor Philip Lowe reiterated that

it would be many years before cash rates would rise, and that will keep risk

free rates low across the term structure. At the same time, the success of

Australia's health and economic response to the pandemic needs to be

acknowledged and, along with the ongoing bond supply program, that will be a

bearish influence on bonds. So, yields are off their lows but there is no real

sign that supply is swamping demand at the moment, limiting the bearish impetus

from that source. A range-trade has therefore ensued and we think it will remain

in place for now. Of course volatility within the range will be dominated by

swings in global sentiment, as reflected in the strong correlation with UST

yields. However, domestic-based relative value metrics suggest that any moves

above 1.0% in 10yr AU bonds should be seen as a buyside entry zone. Conversely,

should moves below 0.8% should be sold into. Previously we were more comfortable

fading sell-offs but now we acknowledge at that there is likely to be greater

scope for short-sharp sell-offs than there is for any major re-price in bond

yields to a lower range."