Aust bonds firmer despite Fed minutes

Australian bond futures prices are higher as traders appear unconcerned about the possible end to the US Federal Reserve's bond-buying program.

At 0830 AEDT on Thursday, the March 10-year bond futures contract was trading at 96.475 (implying a yield of 3.525 per cent), up from 96.440 (3.560 per cent) on Wednesday.

The March three-year bond futures contract was at 97.130 (2.870 per cent), up from 97.090 (2.910 per cent).

The Fed minutes, released during the overnight session, showed that some members expressed concern over its economic stimulus program called quantitative easing (QE).

They were worried that, with an improving US labour market, QE could eventually escalate inflation and unsettle financial markets.

Westpac interest rate strategist Tim Jung said the minutes seemed to signal that there could be an early end to quantitative easing.

"The markets, I think, glossed over that and with stocks coming off, US Treasuries have rallied on the back of that and the Aussie market has this morning opened up quite strong," Mr Jung said.

"The market has opened up incredibly strong. If the market was concerned about QE it would have opened up quite weak."

On Friday, Reserve Bank of Australia (RBA) governor Glenn Stevens will appear before the House of Representatives committee, which, Mr Jung said, would be a focus for bond markets.

"He's likely to emphasise the global economy being a bit stronger but the domestic conditions being a bit weaker," Mr Jung said.

"He'd be looking at those things, and the peak of the mining boom will definitely get a mention. But, I think he'll play a straight bat to all of these questions."

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.93890.000.00%
    AUDUSD=X
    0.5480-0.0001-0.01%
    AUDGBP=X
    0.6901+0.0001+0.02%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg