Trading Room home page

Aust bonds weaker after strong capex data

Market watch top headlines

Australian reports

World reports

Stocks to watch

ARI, OGC, AQG, RCT, SYD,

AAP

2013-02-28

Australian bond futures prices are weaker after official business investment figures showed that Australia's mining boom still has some way to to go.

The Australian Bureau of Statistics said capital expenditure (capex) in the December quarter fell 1.2 per cent, which was worse than expectations of a 1.0 per cent rise.

However the focus for investors was on the projected revenue figures, which showed that mining investment will still be strong for the current financial year and the next.

ANZ head of interest rate research Tony Morriss said the capex figures meant that another interest rate cut by the Reserve Bank of Australia has become less likely.

"Our take on the data was that is was a little bit stronger than expected and is insufficiently weak for the RBA to be considering easing policy in the near term," he said .

"The market's initial response to the capital expenditure data was for a small rally because the quarterly numbers were a little bit weak, but looking at the first estimate for investment going into 2013/14 shows that mining investment will be strong and allow a bit more time for the focus of growth to go from the mining to the non-mining sectors."

At 1630 AEDT on Thursday, the March 10-year bond futures contract was trading at 96.680 (implying a yield of 3.320 per cent), down from 96.690 (3.310 per cent) on Wednesday.

The March three-year bond futures contract was at 97.260 (2.740 per cent), down from 97.290 (2.710 per cent).

Mr Morriss said the market would now be focusing on the release of a raft of economic figures from the US on Friday night, the highlight of which is the February manufacturing data from the Institute of Supply Management (ISM).

He said the market would also be watching out for news on Italy's attempts to form a government after the weekend elections delivered an unclear result.