Australian bonds stronger after US bonds recovery

The Australian bonds opened stronger after overnight rebound of the US Treasury market.

The March 10-year bond futures contract rose from Thursday’s 94.295 figure to 94.325 (implying a yield of 5.675 per cent) at 0830 AEDT on the ASX 24.

The March three-year bonds futures contract, meanwhile, was up from 94.680 (5.320 per cent) to 95.660 (4.540 per cent).

Stephen Roberts, chief economist of Nomura Australia, said the bonds were pushed up by the overnight rebound of US Treasuries.

Referring to the present volatility of the US Treasuries, Roberts said, "That's probably going to be the pattern of things for the time being because we've got fairly thin markets and a fair bit of movement when the yields start to get up to their high ranges for US 10-year bond yields, 3.50 per cent to 3.60 per cent.”

Roberts claimed that the buying in that happened last night was inevitable in spite of the equity market’s solid footing attained from strong US data.

Roberts expects the bond market to remain unstable throughout the holiday season.