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SYDNEY, Feb 4 AAP

February 04 2013, 09:05AM

Australian bond futures have sold off following weakness in US Treasuries.

Westpac senior market strategist Damien McColough said local bond futures prices opened lower on Monday after a selloff in US Treasuries on Friday.

At 0830 AEDT on Monday, the March 10-year bond futures contract was trading at 96.495 (implying a yield of 3.505 per cent), down from 96.500 (3.500 per cent) on Friday afternoon.

The March three-year bond futures contract was at 97.100 (2.900 per cent), down from 97.130 (2.870 per cent).

Both contracts moved lower following the open, with 10-year futures falling to 96.350 (3.650 per cent) and three-year futures falling to 97.050 (2.950 per cent).

Mr McColough said three-year futures prices had now fallen below their recent support level of 97.100, and were likely to continue to move lower.

"I think you will find the technical levels have now broken and the target from here would be 97.000," he said.

Mr McColough said domestic events would drive the local market this week, including the Reserve Bank of Australia's monthly interest rate decision on Tuesday, the release of retail trade figures for December on Wednesday and the release of employment figures for January on Thursday.

"We've got a number of really important risk events this week," he said.

"Today, it might be a case of wait and see but I think the momentum is to the downside."