950815

Australian

bonds remain

easier

SYDNEY: Australian bond prices remained in negative territory in tandem with US bond trading in Tokyo after a largely futures-driven session, traders said.

Physical flows were negligible after recent buoyant offshore demand at the long end of the curve, and the focus is turning back to the underlying concern over the direction of domestic interest rates, which has continually dogged the short-end.

Uncertainty as to whether offshore buyers will return to the market in any strength could keep it from slipping too far for now, which may leave the market trading in a narrow range prior to Thursday's July local imports data release.

The September 10-year bond futures contract, which ended at 0.055 down at 90.860, quickly ran into overhead resistance at 90.930 just after the opening, but found support at 90.840.

The market is also finding reluctance to push the 10-year cash bond yield back below 9.0 percent after its brief visit there last week for the first time in a month.

The 10-year bond yield ended up 0.07 at 9.08 percent.

Last week's heavy supply at the quarterly refunding auctions continues to weigh on the US bond market and may check any reaction to a duet of US indicators due later today which are expected to be bond friendly.

July US capacity utilisation and industrial production are due at 1315 GMT and are expected to show weak production due to manufacturers trimming inventories.-Reuter