Australian 10-year bond futures are trading near all-time highs, as fears about the state of the US economy cause sharp losses on global markets overnight.

The sell-off has helped boost local bonds, which are seen as relatively less-risky and lower-yielding investments.

At 0830 AEST on Friday, the December 10-year bond futures contract was trading at 95.955 (implying a yield of 4.045 per cent), up from Thursday’s close of 95.890 (4.110 per cent).

By 0906 AEST, the 10-year contract reached 95.980 (4.020), which is near its all-time high of 96.025 (3.975), according to Bloomberg data.

The December three-year bond futures contract was at 96.560 (3.440 per cent), up from 96.480 (3.520 per cent).

Mizuho treasurer Joe Ivanovski said traders were repositioning themselves after the US Federal Reserve gave a bleak assessment of the American economy.

Lingering concerns about Europe’s debt problems were also dragging sentiment lower and supporting bonds, he said.

“A lot of it was attributed to the realisation that the US and Europe might be heading into what people are calling a double-dip recession but I don’t think we ever got out of the first one, to be honest,” Mr Ivanovski said.

He said bond prices in Australia would most likely follow movements on the local equity market on Friday.

“If our stock market is down as much as Europe and America was, then we’ll see further strength in bond prices.”

During the local session on Friday, the Reserve Bank of Australia (RBA) is due to release its half yearly Financial Stability Review.

Traders will be closely following developments from the ongoing talks between the Group of 20 (G20) and International Monetary Fund (IMF) officials, being held in Washington, Mr Ivanovski said.

“I expect most of the headlines to be out before markets close in New York, otherwise it will be a very hairy Monday morning for everybody in Australia.”