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Australian bonds

easier

SYDNEY: Australian bonds ended a lacklustre session easier, in sharp contrast to Wednesday's rampant rally, as the market marked time ahead of Friday's key US employment report, traders said.

The euphoria after yesterday's announcement that Japan is endeavouring to promote investment overseas to stem the yen died down, but left the market balanced between the hope of future Japanese demand and a background of bond-negative data.

"It's been lethargic at best, and I don't think people will want to get too heavily involved ahead of the US jobs stats tomorrow." one trader said.

The September 10-year bond futures contract ended 0.015 down at 90.690 after trading in less than a six basis point range, and with turnover shrinking below 8,000 lots.

This left the yield on the 10-year benchmark bond up one basis point and teetering on 9.25 percent.

While tomorrow's US reaction to their employment numbers will steer the Australian market in the short-term, local bonds will have their own labour force report to contend with the next Thursday, a series that has seen continued strength in recent months.

At the ultra short-end, the now more active December 90-day bill futures contract put in a steadier performance, closing two basis points higher at 92.26 and well above Wednesday's low of 92.14.

However, at current levels it is still predicting a cash rate of 7.74 percent and discounting a 25 basis point tightening in current local official interest rates at 7.50 percent by maturity.-Reuter