Bonds lower ahead of FOMC meeting

Australian bond futures prices are lower ahead of a crucial meeting of the US central bank.

At 1630 AEDT on Wednesday, the December 10-year bond futures contract was at 96.855 (implying a yield of 3.145 per cent), down from 96.955 (3.045 per cent) on Tuesday.

The December three-year bond futures contract was trading at 97.320 (2.680 per cent), down from 97.395 (2.605 per cent).

UBS interest rate strategist Matthew Johnson said there had been little to push bond prices in either direction, ahead of an announcement by the US Federal Open Market Committee (FOMC) whose meeting ends on Wednesday.

"There was nothing to speak of in the (domestic) data today," he said.

"We had a consumer confidence survey which never moved the market much, but if you were looking for positives, the lending finance data showed a decent pickup in loans to buy cars, which shows that there's some confidence out there.

"Other than that, I think bonds took their lead from equity markets overnight and we've got the Fed tonight, so no-one wants to do much."

On Wednesday, the Westpac/Melbourne Institute index of consumer sentiment showed a fall by 4.1 per cent to 100.0 for December - this suggests there was an equal number of pessimists and optimists responding.

Mr Johnson said global markets were fairly positive about what the FOMC would announce.

"I think the Fed is likely to announce that they will continue accumulating 45 billion per month of treasury securities, so continue with Operation Twist," he said.

"They'll probably acknowledge a pick up in some of the data recently."

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9382+0.0014+0.14%
    AUDUSD=X
    0.5574-0.0003-0.06%
    AUDGBP=X
    0.6780-0.0002-0.02%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg