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Aust bond futures stronger after US rally

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AAP

2013-02-07

Australian bond futures prices are higher, having sustained an early rally on the back of a stronger US Treasury market.

At 1630 AEDT on Thursday, the March 10-year bond futures contract was trading at 96.555 (implying a yield of 3.445 per cent), up from 96.500 (3.500 per cent) on Wednesday.

The March three-year bond futures contract was at 97.190 (2.810 per cent), up from 97.160 (2.840 per cent).

Nomura rates strategist Martin Whetton said bond futures prices opened strongly after a last-minute rally in the US and held on to those gains throughout the local session.

"We've done not much today. We rallied on the open because of what the US did and we pretty much just left it at that for the day," Mr Whetton said.

He said the Australian bond market had no reaction to news that the jobless rate remained unchanged in January.

The Australian Bureau of Statistics said on Thursday the unemployment rate stayed a 5.4 per cent but with total employment up 10,400.

Mr Whetton said bond futures prices were likely to remain relatively flat overnight, with the outcome of the European Central Bank's (ECB) policy meeting expected to have little influence.

The market is also expected to remain subdued ahead of the Reserve Bank of Australia's (RBA) quarterly Statement on Monetary Policy on Friday, he said.

"We are unlikely to move out of the current range because we've got the monetary policy statement tomorrow and no one will want to take any fresh positions into that," he said.