Australian bond futures prices have sold off sharply, reversing the rally that followed the release weaker domestic jobs figures on Thursday.
At 1630 AEDT on Friday, the March 10-year bond futures contract was trading at 96.610 (implying a yield of 3.390 per cent), down from Thursday's local close of 96.735 (3.265 per cent).
The March three-year bond futures contract was at 97.190 (2.810 per cent), down from 97.310 (2.690 per cent) previously.
Westpac senior market strategist Damien McColough said bond futures sold of globally on Thursday night and the trend continued during Friday's Asian session.
He said the sell off was likely to be a reaction to Thursday's rally, which saw ten-year bond futures rally 85 basis points locally, due in part to news Australia's unemployment rate rose to 5.4 per cent in December.
"It's one of those really weak days," he said.
"I think the market just got itself all the one way and now it is kinda stopping out of long positions."
Mr McColough said the release of Chinese economic data, showing the country's economy grew by 7.8 per cent in 2012, up from 7.4 per cent in the 12 months to September, would also have helped the selloff.
He said bond futures prices were likely to continue to move lower overnight and could remain weak for several days.
"I think it could probably drift a little bit further," he said.
"We probably need to have a couple of days of consolidating before people are looking to come back into the market and start buying."