Westpac expect "the ongoing RBA........>

AUSSIE BONDS: Westpac expect "the ongoing RBA cycle to keep rates low for

longer. Hence we will either long or neutral in both a tactical and strategic

sense over coming weeks. It is too early to expect yields to rise on an

improving economic outlook. We are neutral at current levels but tactically we

would be better buyers on dips, especially those led 10yr Futures Price by US

price action. The curve is very long end directional given how much RBA easing

is in the forward profile. Fade any US-led steepening back toward the 45-50bp

region. BEIs are low but are awaiting confirmation that RBA policy is effective

off current levels. We think they will eventually trend higher from current

levels. It is too early to buy BEIs, however it would provide good participation

in any global outright sell-off. We are contemplating how much more AU

outperformance is likely vs. US Tsys on a near term and medium-term basis. The

response of the curve to a FOMC-induced UST shift will further inform our view.

Further outperformance will be slow, however there is little reason to expect a

major underperformance while the RBA outlook is shifting. The next major move

will most likely occur on a further RBA-driven dip in the currency."