Aust bonds close firmer
Market watch top headlines
Australian bonds have ended the local trading day stronger after big losses on Asian equity markets spurred demand for fixed-income assets.
At 1630 AEDT on Wednesday, the March 10-year bond futures contract was trading at 96.665 (implying a yield of 3.335 per cent), up from Tuesday's local close of 96.575 (3.425 per cent).
The March three-year bond futures contract was at 97.240 (2.760 per cent), up from 97.190 (2.810 per cent), previously.
The local bond market opened firmer, as investors took their cues from the move in US Treasuries during the overnight offshore session amid concerns about the prospect of long, protracted negotiations over the US debt ceiling.
Fitch Ratings said it might downgrade the US triple-A credit rating if there was no agreement on increasing the amount the US government was able to borrow.
The bond market rally continued throughout Wednesday's local session in response to a negative day on bourses across Asia and despite gain on the Australian stock market.
Deutsche Bank fixed income strategist David Plank said bond futures prices rose about six basis points during the day.
"The weakness in equities across Asia has supported the market," Mr Plank said.
"That's seen the rally continue today."
"It's quite a strong rally."
At 1630 AEDT, the Shanghai Composite was down 1.85 per cent, the Nikkei 225 was down 1.97 per cent and the Hang Seng was off 0.38 per cent.
By contrast, the S&P/ASX200 closed up 0.46 per cent.
While market players would continue to focus on any progress over the US debt ceiling during the New York session, US data on industrial production, inflation and housing was also due for release.
The eurozone consumer price index for December was also scheduled for publication.