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Aust bonds slightly firmer in quiet trade

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AAP

2013-01-07

Australian bond futures prices are slightly higher on a quiet day with very little economic data to give traders direction.

JP Morgan interest rate strategist Sally Auld said Australian bonds had a small rally but there doesn't seem to be anything driving the price action.

"The only thing is US Treasuries have rallied a little bit in Tokyo so maybe that has added to the bid tone in bond markets - also share markets are lower," she said.

"It's just one of those days when I wouldn't be surprised to see the move reversed when London and New York get in tonight."

Ms Auld said there wasn't much market reaction to the announcement that international banking regulators have agreed on global rules meant to ensure banks keep enough cash in hand to survive future market crises - part of the Basel III package of reforms.

"I thought the Basel stuff was quite good for equity markets so I'm a bit surprised to see the bond market a bit lower in yield (and higher in price)," Ms Auld said.

At 1630 AEDT on Monday, the March 10-year bond futures contract was trading at 96.585 (implying a yield of 3.415 per cent), up from 96.575 (3.425 per cent) on Friday.

The March three-year bond futures contract was at 97.170 (2.830 per cent), up from 97.150 (2.850 per cent).