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Aust bonds unchanged despite Capex data

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AAP

2012-11-29

Australian bond futures prices are almost unchanged, despite a weaker capital investment outlook.

UBS interest rate strategist Matthew Johnson said local bond futures prices rallied following the release of official capital expenditure figures that showed a downwards revision to spending plans for 2012/13.

The biggest drop was in the mining sector, with spending expectations down more than eight per cent compared to three months ago.

This was seen by many investors as a sign the mining investment boom may peak sooner and at a lower level than previously expected.

"I think the weaker capex outlook means that the peak in mining investment is going to be revised down, which I think is important information," Mr Johnson said.

Mr Johnson said the rally faded later on Thursday, amid a strong performance from local equity markets and higher yields on US Treasury Notes.

He said local bond futures should be well supported overnight on Thursday.

"I think we should be able to rally at least a bit more from here."

At 1630 AEDT on Thursday, the December 10-year bond futures contract was at 96.860 (implying a yield of 3.140 per cent), down slightly from 96.865 (3.135 per cent) on Wednesday.

The December three-year bond futures contract was trading at 97.330 (2.670 per cent), unchanged from Wednesday.