The Australian bond market is firmer as traders in the US and Australia moved into safe haven assets after disappointing US economic data.
Figures out on Wednesday night showed that activity in the US manufacturing sector slowed for the fifth straight month in March and US businesses added only 189,000 jobs to the American economy in March.
Commonwealth Bank head of debt research Adam Donaldson said there was a rally in bonds driven by the softer data.
“That softer data adds to evidence that there is a little bit of a lull in the US recovery and that brings into greater question whether the US Federal Reserve will be tightening as early as June or even at all this year,” he said.
Mr Donaldson said another steep fall in iron ore prices is also supporting bond prices, which he said would increase the chances of an Reserve Bank interest rate cut on Tuesday.
He said that markets will now be focusing on the release of official US employment figures for March on the Good Friday public holiday.
Mr Donaldson said the softer data has caused the market to pare back its expectation for a strong US payrolls number.
At 1630 AEDT on Thursday, the June 2015 10-year bond futures contract was trading at 97.700 (implying a yield of 2.300 per cent), up from 97.665 (2.335 per cent) on Wednesday.
The June 2015 three-year bond futures contract was at 98.360 (1.640 per cent), up from 98.320 (1.680 per cent).
Earlier in the day, three year bond futures peaked at a new all-time high of 98.390 and ten year futures hit a one month high of 97.745.
Government bond yields:
- CGS 4.75 pct July 2017, 1.679%, from 1.720% on Wednesday
- CGS 2.75 pct April 2024, 2.250%, from 2.281%
Sydney Futures Exchange prices:
- June 2015 bill futures, 98.040 from 98.020
- September 2015 bill futures, 98.170 from 98.150
(*Closes taken at 1630 AEDT previous local session)