Worry surrounding the first USD/CNY....>

BOND SUMMARY: Worry surrounding the first USD/CNY fix after mainland China's

Labour Day holidays, coupled with USD/JPY breaking below last week's low, built

on the negative momentum for U.S. equities that was seen into the NY close

(largely attributed to the commentary provided by Fed Vice Chair Clarida),

weighing on e-minis in early Asia-Pac trade. However, the USD/CNY fix failed to

generate the fireworks that many feared, which allowed equity markets to recover

from worst levels, while T-Notes were happy to hold a tight range, with the cash

space closed in Asia hours, owing to the final day of the Japanese Golden Week

holidays. Activity was light, with T-Notes last -0-05 at 138-22+ on volume of

~20K. Eurodollar futures +1.0 to -0.5 through the reds. Quarterly refunding

announcement eyed later today.

- The Aussie bond space was more focused on the broader risk backdrop than

(outdated/skewed) domestic data and a decent enough round of ACGB 2031 supply,

that was easily digested (some of the potential reasons for the smooth auction

were flagged in our auction preview). YM -1.5 on the day, with XM -3.5, with

some spill over from FI trade across the Tasman also evident.