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Bonds up on market moves, NAB survey

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AAP

2012-12-11

Australian bond futures prices are higher on global market moves and a weak business survey.

At 1630 AEDT on Tuesday, the December 10-year bond futures contract was at 96.955 (implying a yield of 3.045 per cent), up from 96.930 (3.070 per cent) on Monday.

The December three-year bond futures contract was trading at 97.395 (2.605 per cent), up from 97.370 (2.630 per cent).

ANZ head of interest rate research Tony Morriss said uncertainty around Italy's political situation had influenced Australian bond prices.

"Bonds started to rally first thing this morning," he said.

"Italian political instability has definitely got market attention - we saw a move in peripheral European bonds, and (US Fed) Treasuries rallied as well."

Italy's prime minister Mario Monti resigned over the weekend, after a withdrawal of support from the party of former leader Silvio Berlusconi.

Mr Morris said an extremely weak reading in National Australia Bank's monthly business survey, had pushed Aussie bond prices higher.

"The NAB data, particularly the drop in confidence, was notable, particularly because conditions, while remaining negative, were largely the same," he said.

NAB's survey showed business confidence slumping to minus nine points in November, from minus one in October.

This was its lowest point since the global financial crisis.

Business conditions remained weak but unchanged at minus five points.

Mr Morris said a meeting of the US Federal Open Market Committee on Tuesday and Wednesday would be the next big influence on markets.