Bonds slip as Brexit fears ease slightly

The Australian bond market is down with sentiment remaining stronger after weekend Brexit campaigns were suspended in the wake of the killing of a British MP.

"It is hard to think the market's calmer tone to end last week is going to be an ongoing theme this week, particularly as Brexit campaigning and the release of opinion polls has resumed again," ANZ economists said.

"To be fair, the sad murder of UK politician Jo Cox may see the rhetoric from both camps get toned down somewhat."

With a weekend Brexit poll shifting towards the remain camp, ANZ's economics team expect modestly lower bond prices on Monday.

"Commodities (also) moved higher as a weaker US dollar sparked a broad move back into risky asset classes," they said.

At 0830 AEST on Monday, the September 2016 10-year bond futures contract was trading at 97.875 (implying a yield of 2.125 per cent), down from 97.915 (2.085 per cent) on Friday.

The September 2016 three-year bond futures contract was at 98.440 (1.560 per cent), down from 98.490 (1.510 per cent). 


KEY MOVEMENTS: 


Government bond yields:

* CGS 5.25pct March 2019, 1.562pct unchanged from Friday

* CGS 4.25pct April 2026, 2.076pct, unchanged 


Sydney Futures Exchange prices:

* September 2016 bill futures, 98.080, from 98.110

* December 2016 bill futures, 98.150, from 98.180 


(*Closes taken at 1630 AEST previous local session)