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AAP

2013-01-31

Australian bond futures have strengthened in price, following a weaker reading for US growth and commentary from that country's central bank.

At 1630 on Thursday, the March 10-year bond futures contract was trading at 96.570 (implying a yield of 3.430 per cent), up from Wednesday's local close of 96.520 (3.480 per cent).

The March three-year bond futures contract was at 97.190 (2.810 per cent), up from 97.130 (2.870 per cent).

UBS interest rate strategist Matthew Johnson said the release of gross domestic product (GDP) data for the US, plus a meeting of the Federal Open Market Committee (FOMC) had given Australian bond prices a lift.

"The overnight US GDP report was a bit of an antidote to the positivity which has built up over the last quarter or so," he said.

"We also had the Fed downgrading its economic assessment to reflect that weakness - it shows that they are a long way from changing their (bond-buying) policy."

Official data showed that the US economy contracted by 0.1 per cent in the December quarter.

This was followed by comments from the FOMC that economic growth had appeared to be slowing since their December meeting. They had previously said the economy was expanding at a moderate pace.

Mr Johnson said Australian markets would continue to focus on global events, with key job figures due out on Friday.