Aust bond futures mixed on US inflation

Australian bond futures prices are mixed after US core inflation figures came in better than expected.

Official US figures showed plunging petrol prices had pulled inflation down sharply in January.

But core inflation, which excludes petrol and food, held steady at 1.6 per cent, fuelling hopes that inflation will not be a barrier to expected rate hikes from the US Federal Reserve this year.

“One of the big drivers in recent months has been concerns about low inflation and one of the questions for the market is whether that’s going to be a temporary phenomenon,” CMC Markets chief market analyst Ric Spooner said.

“The fact that the US core CPI number was a little bit stronger, gave some comfort.”

At 1630 AEDT on Friday, the March 2015 10-year bond futures contract was trading at 97.575 (implying a yield of 2.425 per cent), down from 97.615 (2.385 per cent) on Thursday.

The March 2015 three-year bond futures contract was at 98.230 (1.770 per cent), up from 98.210 (1.790 per cent).

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