Bonds lower on Greek deal

Australian bonds have opened slightly lower on news that Greek minister have agreed an on austerity measures, and ahead of key domestic bank developments.

At 0830 AEDT on Friday, the March 10-year bond futures contract was trading at 95.865 (implying a yield of 4.135 per cent), down from 95.880 (4.120 per cent) on Thursday.

The March three-year bond futures contract was at 96.380 (3.620 per cent), down from 96.400 (3.600 per cent).

Nomura rates strategist Martin Whetton said the bond market was subdued as it awaited a rates decision from ANZ bank and a Reserve Bank of Australia (RBA) monetary statement.

"Today, we've got two major things to focus on. One is ANZ pricing its loans independently of the Reserve Bank, which will be closely watched following rises in funding costs," he said.

"At the same time, we've got the RBA's statement on monetary policy, and given they were out of consensus in deciding not to cut rates this week, the market will be watching for signs that they see the world in a better position."

The RBA kept the official interest rate on hold at its meeting on Tuesday, despite market expectations of a 25-basis-point cut.

Mr Whetton said global markets had reason to be more optimistic, with news overnight that Greek ministers had signed off on an austerity package to help Greece secure a debt bailout.

"This is probably a game-changer in terms of the asymmetry of risk," he said.

"We're probably moving to a regime of higher market rates as distinct from official policy rates.

"The LTRO (long-term refinancing operation) has done a good job, and policy-makers seem to have got it. The problems in Europe have not gone away, but the risk to markets from substantially higher funding rates for peripheral sovereigns has been taken away to a large extent."

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