Bonds mixed on weak US manufacturing

Australian bond prices have opened mixed, after a disappointing reading for US manufacturing activity.

At 0830 AEDT on Wednesday, the March 10-year bond futures contract was trading at 96.685 (implying a yield of 3.315 per cent), up from Tuesday's close of 96.665 (3.335 per cent).

But, the March three-year bond futures contract was unchanged at 97.230 (2.770 per cent).

UBS interest rate strategist Matthew Johnson said disappointing US data overnight had kept Aussie bond prices in a strong position.

"Of particular interest was the Richmond Fed survey," he said.

"We've now had three decelerating US manufacturing surveys. So, the much-vaunted improvement in the US is perhaps uncertain."

Overnight, the Federal Reserve Bank of Richmond manufacturing index - which measures activity in the US mid-Atlantic region - showed a sharp fall to -12 in January, from 5.0 the month before.

Similar surveys from the Philadelphia and New York Federal Reserve Banks have shown slowdowns in January.

Mr Johnson said Australian inflation data due on Wednesday would be the focal point for the market.

"I think there's a risk that inflation will come in a bit lower than the market thinks," he said.

"If it is lower, that could clear the path for the RBA (Reserve Bank of Australia) to cut rates."

An AAP survey of 15 economists shows the median expectation is for a rise of 0.5 per cent in the consumer price index (CPI) numbers for the December quarter.

AAP css/

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9281-0.0006-0.06%
    AUDUSD=X
    0.5527-0.0008-0.14%
    AUDGBP=X
    0.6713-0.0008-0.11%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg