Aust bonds firmer after Yellen testimony

The Australian bond market is firmer after comments from the US central bank show it is in no hurry to raise its interest rate.

US Federal Reserve chair Janet Yellen told a Congressional committee that the US labour market still showed some weakness and inflation continued to fall, making any interest rate hike unlikely before June.

BK Asset Management managing director Kathy Lien said Australian bond futures followed US Treasuries after Dr Yellen appeared cautious about the US economy.

“While the central bank governor expressed optimism about the economic outlook and inflation, she provided no signal on when interest rates would rise,” Ms Lien. said.

“Equity and Treasury traders celebrated by sending stocks to record levels and Treasury (bond) prices higher.”

At 0830 AEDT on Wednesday, the March 2015 10-year bond futures contract was trading at 97.530 (implying a yield of 2.470 per cent), up from 97.495 (2.505 per cent) on Tuesday.

The March 2015 three-year bond futures contract was at 98.160 (1.840 per cent), up from 98.140 (1.860 per cent).

Of interest to markets on Wednesday, will be the release of Chinese manufacturing data for February and December quarter construction figures from the Australian Bureau of Statistics.


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