Australian bond futures are weaker following news that consumer sentiment surged higher in February.
Nomura head of fixed income Jon Linton said bond futures prices fell following the release of the Westpac/Melbourne Institute Consumer Sentiment Index for February.
The index rose 7.7 per cent to 108.3 in the month, its highest level since December 2010.
"That was clearly on the strong side, the market has really reacted to that," Mr Linton said.
He said the figures lowered market expectations that the Reserve Bank of Australia (RBA) would cut the cash rate again in March.
The RBA has cut the cash rate by a total of 1.75 percentage points between November 2011 and December 2012 but kept it on hold at 3.0 per cent at its first meeting for 2013 on February 5.
Mr Linton said he believed further rate cuts were still likely and bond prices were likely to move higher over coming days.
"I think the fundamental story still holds, which is the RBA looking at the non-mining sector and questioning where the growth is going to come from to take over from the mining sector," he said.
"And I think that still causes the RBA to cut rates."
At 1630 AEDT on Wednesday, the March 10-year bond futures contract was trading at 96.520 (implying a yield of 3.480 per cent), down from 96.570 (3.430 per cent) on Tuesday.
The March three-year bond futures contract was at 97.150 (2.850 per cent), down from 97.220 (2.780 per cent).