The bond market has weakened after strong US jobs data convinced economists American interest rates will rise mid-year.

Local futures prices weakened in line with US Treasuries after Labor Department data showed that 295,000 jobs were created in February, which was better than market expectations of 235,000 positions.

This saw a sell-off in 10-year Australian bonds, with financial markets more convinced US Federal Reserve will act soon to raise the interest rate.

“It’s firmed up its view that the US Fed might tighten in June,” Deutsche Bank fixed income strategist David Plank said.

The American unemployment rate also fell to 5.5 per cent, from 5.7 per cent.

“Non-farm payrolls, US, came out much stronger than expected so bonds sold off as a result,” Mr Plank said.

At 0830 AEDT on Monday the March 2015 10-year bond futures contract was trading at 97.290 (implying a yield of 2.710 per cent), down from 97.405 (2.595 per cent) on Friday.

The March 2015 three-year bond futures contract was at 98.010, (1.990 per cent), from 98.080 (1.920 per cent).


Government bond and bank bill yields:

* CGS 4.75pct July 2017, 1.915% unchanged from Friday

* CGS 2.75 pct April 2024, 2.566% unchanged

Sydney Futures Exchange prices:

* March 2015 bill futures, 97.650 from 97.640

* June 2015 bill futures, 97.830 from 97.850

(*Closes taken at 1630 AEDT previous local session)

Source: IRESS