Westpac write "while the global bond...>

AUSSIE BONDS: Westpac write "while the global bond backdrop has provided bullish

impetus, AU rates mkts have also re-priced on domestic fundamentals. Q3 GDP

lowered exp. for '19 growth & a speech by RBA Dep. Gov. Debelle was sig in terms

of the forward RBA profile. The mkt has taken Debelle's speech as a sig shift in

RBA messaging & pricing now reflects a very balanced bias for RBA risks, now

almost exactly matching Westpac's view that the RBA is on hold at least until

the end of '20. As a result 3yr & 10yr futures have rallied, matching the moves

in US 10yr yields. That has pushed prices through the upper end of ranges that

have been in place throughout '18. So has the range sustainably breached? We

don't think so. We think it is unlikely that the RBA will cut rates or even

further encourage mkts to price-in that possibility. We have ratcheted price

targets up by around 10 ticks at either end of the range. So, we exp. a lot of

the recent themes to remain in place. Trade the outright with a bias to buying

dips at range lows, but also maintain a range-trading discipline by selling into

strength in lower risk sizes. The curve should maintain a 50-60bp range & AU

cross mkt performance remains very +ve, at least at the longer maturities."