Australian bond future prices remain high after rising to a 10-day peak after the release of disappointing jobs figures in the United States.
At 1630 AEST on Monday, the September 10-year bond futures contract was trading at 97.095 (implying a yield of 2.905 per cent), up fractionally from 97.005 (2.995 per cent) on Friday.
The September three-year bond futures contract was at 97.690 (2.310 per cent), up from 97.570 (2.430 per cent).
Deutsche Bank fixed income strategist David Plank said global markets on Monday were still responding to the weak US jobs data released on Friday, which showed the generation of only 80,000 new jobs in June, compared to the expectation of 100,000, with the unemployment rate steady at 8.2 per cent.
“The rally from the close on Friday reflects the weaker US (non-farm) payrolls,” he said.
“There was no great surprise there and we’ve seen weakness across Australian and Asian equities and that’s reinforced the risk-on atmosphere that came from the disappointing payrolls data.”
It would be difficult to predict moves this week, Mr Plank said, given the varying position of Australian bond yields in previous weeks.
“If you look at the past month, what we’ve seen is up or down 10 basis points on a regular basis, but very much clustered around that three percent for the 10 year (bonds),” he said.
“I think any sell-offs are going to be pretty limited because of concerns around the global economy and the prospect of QE3 (quantitative easing).
“If we break in any substantial direction in the near term, it will probably be lower in yield.”