Australian bonds close stronger

After trailing the US Treasury market on its overnight rebound, the Australian bond market ended stronger on Friday’s closing.

From Thursday’s close of 94.295 (5.705 per cent), the March 10-year bond futures contract rose to 94.365 (implying a yield of 5.635 per cent) at 1630 AEDT on the ASX 24. The March three-year bond futures contract inched forward to 95.700 (4.300 per cent) from Thursday’s 95.660 (4.540 per cent) closing figure.

Ivan Colhoun, head of ANZ Bank’s Australian economics and property research said that in spite of the poor performance in its housing sector, he sees an overall strengthening in the US economy as reflected by increasing yields with mounting inflationary pressures and financial requirements.

On Thursday’s US data, Colhoun said, "Most of the figures were pretty good, and for the whole of the week as well."

Colhoun also sees the Treasury rally as an adjustment to the strongly negative reaction on the stronger data.

No major Australian economic data were released on Friday.

Meantime, the market eagerly anticipates Tuesday’s release of the minutes of the December 6 Reserve Bank of Australia meeting on financial policy.