Australian bonds unchanged after Chinese PMI data

Australian bond futures were largely unchanged following the release of economic data that suggested China’s manufacturing sector continues to shrink.

HSBC’s preliminary purchasing managers index showed that despite signs of improvement, China’s manufacturing sector contracted further in February.

The index was at 49.7 for the month, slightly below the key threshold of 50.

A reading below 50 indicates the sector is contracting while a reading above that figure indicates an expansion.

However, Westpac global head of interest rate strategy, Russell Jones, said the data had little impact on Australian bond future prices on Wednesday. He said traders were increasingly confident the RBA would hold interest rates at their current level for the next few months and were better able to absorb negative news like the Chinese data.

“I think the market is pretty happy with what the RBA is telling them,” he said.

"Something significant would need to happen to change the outlook and the Chinese data isn't going to cut it."

At 1630 AEDT on Wednesday, the March 10-year bond futures contract was trading at 95.850 (implying a yield of 4.150 per cent), the same level as on Wednesday.

The March three-year bond futures contract was at 96.300 (3.700 per cent), down slightly from 96.320 (3.680 per cent).

AAP

AAP