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Australian bonds

slightly down

SYDNEY: Australian bond ended slightly lower on the day following today's A$1.0 billion three-tranche Treasury bond tender and as traders awaited the outcome of the US Federal Open Market Committee (FOMC) meeting later today.

Average yields at the tender were just above prevailing market rates, but traders expect the new supply will quickly be absorbed once today's FOMC meeting is out of the way.

"There was some reluctance to get too heavily involved in the tender ahead of the US tonight, but the longer stocks seemed to go okay," one trader said.

Turnover remained subdued with September 10-year bond futures just making 10,000 lots by the close of business.

An article in the Washington Post over the weekend added some uncertainty into today's US Federal Open Market Committee meeting, although generally policy is expected to be unchanged.

Interest in the meeting was kept alive by a weekend article in the Washington Post suggesting the Fed might loosen policy on falling inflation pressures even if growth is picking up.

Sentiment has been leaning towards a tightening in local interest rates in the future, but a further US easing in policy would ease some of those pressures.-Reuter