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Bonds firmer as eurozone data disappoints

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SYDNEY, Feb 22 AAP

February 22 2013, 09:03AM

Australian bond futures prices are higher after the release of some disappointing eurozone manufacturing and consumer confidence data.

At 0830 AEDT on Friday, the March 10-year bond futures contract was trading at 96.525 (implying a yield of 3.475 per cent), up from 96.485 (3.515 per cent) on Thursday.

The March three-year bond futures contract was at 97.160 (2.840 per cent), up from 97.130 (2.870 per cent).

St George chief economist Hans Kunnen said investors moved out of riskier assets like shares and gave the US and Australian bond markets a boost.

"Risk aversion continued to play out overnight as European data disappointed markets and investors contemplated the possibility of US policy makers easing back on the current pace of monetary stimulus," Mr Kunnen said.

"While these fears may be overblown, investors were not in the mood to take risk, fleeing to the relative safety of bonds."

The Eurozone Purchasing Managers' Index showed that manufacturing activity fell in February.

Meanwhile, a survey indicated that the region's consumer confidence improved slightly but stayed in negative territory, suggesting that most people were pessimistic about the economy.

The key event for markets on Friday would be Reserve Bank of Australia governor Glenn Stevens' testimony to a House of Representatives committee, in Canberra.

Investors will also be focused on the result of the Italian elections to be held over the weekend.