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Aust bonds firm after a week of weakness

Reported by AAP
Tuesday, August 20, 2013
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The Australian bond market is firmer, ending a five day losing streak.

Local and overseas bond prices had fallen in the past week as traders moved out of safe haven assets as markets became more confident about the global economy.

JP Morgan interest rate strategist Sally Auld said Tuesday was the day for a correction and some bargain hunting among traders.

"It's been the first day where it's found a bit of support," she said.

"It's been the first time in a while that we've had equities off and bonds rallying, it's been both bonds off and equities off as well.

"The market has corrected a lot.

"I think people are more confident of buying into the market."

Ms Auld said bonds did not react to the minutes from the Reserve Bank of Australia's August 6 board meeting, when it cut the cash rate by quarter of a percentage point to a new record low of 2.5 per cent.

The central bank used unusually blunt language to say there won't be another cash rate cut soon, but left open the possibility of a further reduction.

At 1630 AEST on Tuesday, the September 10-year bond futures contract was trading at 96.020 (implying a yield of 3.980 per cent), up from 95.970 (4.030 per cent) on Monday.

The September three-year bond futures contract was at 97.220 (2.780 per cent), up from 97.170 (2.830 per cent).

Ms Auld said markets would now be awaiting the release of the minutes of the US Federal Reserve's most July policy meeting, due out on Wednesday night.

26/10/2014 11:14Sydney, Australia. 26 October,2014
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