Westpac note that they "pay special....>

AUSSIE BONDS: Westpac note that they "pay special attention to the behaviour of

Japanese investors, both wholesale and retail. They remain a very important

investor cohort in Australia and understanding their current motivations can

provide insights into future price action. There has been a multi-year

preference for US assets, while AU demand has been subject to variability and

has recently been flat on a 6-month rolling sum basis. However, the data is

subject to a substantial lag, with the last update from the MOF being for

February. A lot has changed since then, not the last of which is the shift in

JPY-hedged spreads to JGBs at the 10yr maturity. Having exhibited a negative

spread since mid-2018, the AU pick-up is now +38bp. It is a smaller +7bp for the

US and has moved negative for Germany. That is encouraging and we note that

there has been significant Japanese demand in recent weeks. This relativity

would suggest it could remain for a bit longer."