950808

Y A K O O B

8-08-1995

Australian

bond prices

finish higher

SYDNEY: Australian bond prices finished near the day's highs as the market eagerly awaited the outcome of today's first leg of the US refunding auctions.

Local bond yields fell to their lowest level in two weeks in anticipation of US Tresasuries continuing their current advance should Japanese investors play a major part in the US$18.0 billion sale of three-year notes, traders said.

Such a move has been widely speculated on after last week's relaxation of Japanese overseas investment rules aimed at checking the buoyancy of the yen.

US bonds extended Monday's gains during Tokyo trading with the 10-year bond easing three basis points to 6.43 percent.

While the record US$42.5 billion, three-legged US refunding programme is expected to set the pace for the market in the near term, any sign of strength in Thursday's labour force report could put the current rally in doubt, traders said.

July employment is expected on average to show a fall of 7,200 as a partial correction to June's 51,700 rise.

However, forecasts range widely from a 40,000 drop to a 15,000 rise, according to a Reuter survey of economists.

The September 10-year bond futures contract broke through resistance at 90.750 during today's advance before stalling at 90.810.

The contract needs to clear the 90.800/90.840 area before it can extend to 91.960, or nine percent yield on the equivalent 10-year bond, traders added.-Reuter