Australian bond futures prices are higher following weakness on global equity markets overnight.
UBS interest rate strategist Matthew Johnson said bond futures prices rallied overnight while stock markets in the US and Europe posted loses.
He said some commentators had attributed the rally in bonds to the results of elections in the Spanish region of Catalonia in which a majority of seats went to parties wanting independence from Spain.
But, he said, attractive bond prices were more likely to be the reason.
"Some people are putting it down to the Spanish election result but, if you ask me, it just looks like the market got towards the cheap side of the range it has been in for the last couple of months," he said.
Mr Johnson said a key event for local bond futures on Tuesday would be a meeting of euro zone finance ministers who are deciding whether to unlock an aid instalment for Greece, promised as part of a bailout package earlier this year.
He said markets expected the ministers, currently meeting in Brussels, to unlock the aid.
Futures prices were unlikely to fall sharply if an agreement was reached, but would rally if the ministers could not agree to unlock the money.
"Most people think they will work something out for Greece, so the risk is that doesn't happen," he said.
At 0830 AEDT on Tuesday, the December 10-year bond futures contract was at 96.855 (implying a yield of 3.145 per cent), up from 96.815 (implying a yield of 3.185 per cent), on Monday.
The December three-year bond futures contract was trading at 97.310 (2.690 per cent), up from 97.290 (2.710 per cent).