Aust bonds firmer after weak overseas data

AUSTRALIAN bond futures prices are higher as weak economic data from the US and Europe sparks a move into safe-haven assets.

During the overnight session, it was reported that the euro zone recession continued into a six quarter in the first three months of 2013.

The recent run of good economic figures from the US came to an end, with falls in industrial production for April and manufacturing activity in New York state in May.

St George economist Janu Chan said the figures dampened hopes that the US Federal Reserve was getting ready to wind down its economic stimulus program.

“Weakening manufacturing and subdued price data raised some concerns about health of the US economy,” she said.

“Investors may have been encouraged that the Federal Reserve will hold off from tapering off its asset purchases (quantitative easing) for longer.”

Ms Chan said the continuation of quantitative easing helped support US Treasuries prices.

At 0830 AEST on Thursday, the June 10-year bond futures contract was trading at 96.750 (implying a yield of 3.250 per cent), up from 96.730 (3.270 per cent) on Wednesday.

The June three-year bond futures contract was at 97.430 (2.670 per cent), up from 97.410 (2.590 per cent).

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