Westpac write "the election result.....>

AUSSIE BONDS: Westpac write "the election result has sparked a minor sell-off

but the broader policy focus remains in place. Early in the week its about the

RBA followed by the Fed later in the week. Buy 3yr bond futures on dips to

98.70. 10yr futures remain vulnerable to offshore influences while 3yrs are

relatively range bound. Geo-political uncertainty likely to keep yields

compressed in the long end and keep the curve flat. It is too early for a shift

steeper on our RBA view. Longer BEIs were lower on the week after the RBA kept

rates on hold, demonstrating a higher tolerance to below target inflation than

previous Boards. 5y5y BEI has bounced off record levels, but remains cheap,

however, it is too early to buy BEIs, but they would provide good participation

in any global outright sell-off. With RBA rate cuts expected in August and

November, there are reasons for the AU/U.S. 10-Year spread to continue to

perform. 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 once the AUD dips."