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Bonds, notes thrive on risk-off sentiment

Australian bonds and notes have risen on the back of nervousness about the US Federal Reserve's next policy move.

Nomura head of macro products Jon Linton said a risk-off attitude has taken hold of the markets amid speculation the US Federal Reserve could hike rates as soon as June.

"Everything is stemming from the Fed at the moment," he said.

"That risk-off sentiment has caused the fixed income products to perform well."

At 1630 AEST on Friday, the June 2016 10-year bond futures contract was trading at 97.700 (implying a yield of 2.300 per cent), up from 97.665 (2.335 per cent) on Thursday.

The June 2016 three-year bond futures contract was at 98.400 (1.600 per cent), up from 98.380 (1.620 per cent).

KEY MOVEMENTS:

Government bond yields:

* CGS 5.25pct March 2019, 1.601pct, from 1.629pct on Thursday

* CGS 4.25pct April 2026, 2.304pct, from 2.354pct

Sydney Futures Exchange prices:

* June 2016 bill futures, 98.020, from 98.000 on Thursday

* September 2016 bill futures, 98.130, from 98.120

(*Closes taken at 1630 AEST previous local session)

Source: IRESS