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

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

longer. Hence, we will be 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 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 too early to

buy BEIs, however, they would provide good participation in any global outright

sell-off. We are contemplating how much more AU outperformance is likely vs.

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."