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Aust bonds close weaker

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AAP

2012-11-19

The Australian bond market has closed weaker as some investors took advantage of the recent rally to take profits.

At 1630 AEDT on Monday, the December 10-year bond futures contract was at 96.990 (implying a yield of 3.01 per cent), down from 97.040 (2.960 per cent) at Friday's local close.

The December three-year bond futures contract was trading at 97.460 (2.540 per cent), down from 97.510 (2.490 per cent).

Australian bonds opened the local trading week flat, before yields on Australian government bonds rose during the session alongside a strong day on for equities.

Royal Bank of Canada fixed income strategist Michael Turner said there was little news to offer the bond market much direction during Monday's session, with trading volumes low.

In the absence of local market news, the investors chose to lock in gains.

"With a lack of clear negative views over the weekend and some expectations that Europe will probably get by by the skin of its teeth again this week, it was perhaps time to take a bit of profit on the rally," Mr Turner said.

"It is a bit of a reversal of last week's moves."

Direction during Monday night's (AEDT) offshore session was expected to come from the latest negotiations between President Barack Obama and the Republican leadership in the US Congress over the "fiscal cliff".

The fiscal cliff referred to a looming US budget deadline over a series of tax measures and government spending cuts which were due to hit in early calendar 2013.

The measures were expected to act as a big drag on US economic growth and have a significant knock-on impact on the global economy, should they come into effect.

Separately, US existing home sales figures for October and a housing market report for November were also due for release.