Bonds slightly lower on fiscal cliff hopes
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Australian bond futures prices are slightly lower as activity in financial markets slows in the lead-up to Christmas, and the US fiscal cliff issue remains unresolved.
At 0830 AEDT on Friday, the March 10-year bond futures contract was at 96.655 (implying a yield of 3.345 per cent), down from 96.660 (3.34 per cent) at Thursday's close.
The March three-year bond futures contract was trading at 97.240 (2.760 per cent), down from 97.250 (2.750 per cent).
JP Morgan interest rate strategist Sally Auld said she did not expect much movement in bond prices, as investors wound down their activities as the end of the year approaches.
"Liquidity in the market is virtually non-existent," she said.
"It's the last full day before Christmas, so I would expect that not very much will happen today.
"The only thing that could move the market in either direction is the fiscal cliff - if they get a resolution or otherwise."
Ms Auld said bond prices had risen slightly overnight, before being pushed back down on suggestions that the US fiscal cliff - a package of tax rises and spending cuts due to begin in January - could be resolved soon.
On Friday, the country's House of Representatives is set to vote on a `Plan B' for the budget, proposed by Republican speaker John Boehner.