Australian bond futures prices fell after the release of the best Australian economic growth figures in four and a half years.
Official data released on Wednesday morning showed gross domestic product (GDP) grew by 4.3 per cent 12 months to March, the strongest annualised growth result since the September quarter of 2007.
GDP for the first three months of 2012 grew by 1.3 per cent, the Australian Bureau of Statistics (ABS) said - more than twice the rate forecast.
After the GDP release, the Australian dollar shot up half a US cent to 98.49 US cents and shares followed suit.
Deutsche Bank fixed income strategist David Plank said safe-haven assets like bond futures weakened after the surprisingly good growth result.
"It was a weak result, the GDP surprised," Mr Plank said.
"The market is very vulnerable to anything that means we are not going to get a continuation of the bad news, and that had an instant impact."
At 1630 AEST on Wednesday, the June 10-year bond futures contract was trading at 97.050 (implying a yield of 2.950 per cent), down from 97.110 (2.890 per cent) on Tuesday.
The June three-year bond futures contract was at 97.710 (2.290 per cent), down from 97.800 (2.200 per cent).
Mr Plank said the main focus for markets on Wednesday night will be the European Central Bank (ECB) interest rate decision.
Markets are also awaiting the release of Australian employment figures for May, out on Thursday.
Unemployment is expected to rise to 5.1 per cent in May, with total employment growth flat for the month, an AAP survey of 15 economists showed.