Aust bonds firm as Wall Street falls

The Australian bond market is firmer on the back of expectations that the US Federal Reserve might not put off raising its interest rates.

US economic figures out on Tuesday night showed that sales of new homes rose in February to a seven-year high, while inflation in America rose for the first time in four months.

RBC Capital Markets fixed income strategist Michael Turner said the strong data gave US Treasuries and Australian bond futures some support.

“That sparked off a bit of rally, certainly in 10-year bonds, and then we’ve gone on with it a little bit today,” he said.

“They didn’t really do too much, it’s just that equity markets were pretty weak going into the close in the US and fixed income caught a bit there and we never really let it go in the Asian session.”

Mr Turner said three-year bond futures are getting some help from expectations that the Reserve Bank will cut the cash rate at its April board meeting.

At 1630 AEDT on Wednesday, the June 2015 10-year bond futures contract was trading at 97.680 (implying a yield of 2.320 per cent), up from 97.630 (2.370 per cent) on Tuesday.

The June 2015 three-year bond futures contract was at 98.300 (1.700 per cent), up from 98.270 (1.730 per cent).


Government bond yields:

  • CGS 4.75 pct July 2017, 1.734%, from 1.771% on Tuesday

  • CGS 2.75 pct April 2024, 2.264%, from 2.313%

Sydney Futures Exchange prices:

  • June 2015 bill futures, 97.960 from 97.940

  • September 2015 bill futures, 98.300 from 98.030

(*Closes taken at 1630 AEDT previous local session)

Source: IRESS


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