Australian bonds decrease slightly, unreceptive to RBA minutes

The Australian bond market weakened slightly as it remained unaffected by the release of the December 7th meeting minutes of the Reserve Bank of Australia (RBA).

As of 1630 AEDT on the ASX 24, the March 10-year bond futures contract was down to 94.370 (implying a yield of 5.630 per cent) from Monday’s 94.430 (5.570 per cent) closing figure, while the March three-year bond futures contract decreased to 94.680 (5.320 per cent) from 94.730 (5.270 per cent).

The RBA kept the cash rate level at 4.75 per cent and stated in the minutes that it considered “mildly restrictive” the present financial policy and added that “employment intentions generally remained solid.”

Associate Director Andrew Hicks of the FIIG Securities noted that the RBA minutes did not make much dent on the bond market. He expected the market to zoom in later this week on US data, particularly the November data on the US Existing Homes Sales and the Durable Goods Sales which are to be out on the nights of Wednesday and Thursday (AEDT), respectively.

Hicks added that any positive impact from the US data could offset the adverse effects on the market of the European sovereign debt issues.