Three-year bonds weaken on US unemployment decline

The Australian three-year bonds opened slightly weaker following release of strong US data overnight.

As of 0830 AEDT on the ASX 24, the March three-year bond futures contract went down to 94.580 (implying a yield of 5.420 per cent) from Thursday's 94.600 (5.400 per cent) closing figure while the March 10-year bond futures contract stayed at 94.300 (5.700 per cent).

Attributing the three-year bonds’ weakening on improved unemployment data in the US, interest rate analyst from JP Morgan Sally Auld said, "The data was probably the main driver. We saw jobless claims decline again so they're at their lowest level in two years and the personal income and consumption numbers are pretty good."

Thursday data from the US appeared to support US President Barack Obama’s statement during an end-of-year conference held Wednesday that the US had passed “the crisis point.”

Hitting the bottom range of new weekly unemployment claims that numbered from 400,000 to 500,000 last year, analysts said last week’s 410,000 unemployment claims in the US augur well for the coming year. As it is, the figure remains too high and still poses great challenge for the country to safely declare falling unemployment rate.

Auld said that investors would be looking at the $US100 billion worth of US government bond auctions during the final week of the year.