Volumes were anaemic in Aussie bonds...>

AUSSIE BONDS: Volumes were anaemic in Aussie bonds today, the 3-Year contract

doing around 70k against the contract average of just below 200k. An initial

bout of weakness at the open dropped 3-Year futures to 98.03, the move driven by

a sluggish decline in US tsys as risk on sentiment took hold in Asia.

- This buoyed stock markets in the region with the ASX200 last up 20 points,

supported by BHP Billitons results and upbeat outlook. Higher stocks combined

with a rise in iron ore for Quingdoa delivery (last up 2.4%) kept a lid well and

firmly on Aussie bonds which have seen a 1 tick range in the 3-Year for much of

the session, YMU7 last down 1 tick at 98.02, XMU7 last flat a t 97.365 with

around 70k contracts trading hands, the move lower was more gradual in the

10-Year but that too saw a 1-tick range for the second half of the session.

- Yield curve has flattened as the long end sees some very slight buying,

3-/30-Year spread last 0.5bp narrower, 3-/10-Year spread 0.2bp narrower. Yield

moves very limited across the curve.