Weak US jobs data continue to drive Australian bond futures prices higher.

The Australian bond market was given a boost after US non-farm payrolls came in weaker than expected on Friday night, showing 169,000 jobs were added in August, below analyst projections of 177,000.

Figures for June and July were also revised sharply lower, with the July number slashed to 104,000 from 162,000 jobs added, while June’s total was reduced to 172,000 from 188,000.

Nomura head of macro products Jon Linton said the weak US data was driving bond prices higher, despite strong trade figures out of China which typically would put downward pressure on bond prices.

He said Chinese industrial production figures, to be released on Tuesday, would set the tone for the Australian market for the day.

“Australia is perceived as the most sensitive to China,” Mr Linton said.

“Anything good for China is by definition good for Australia.”

Mr Linton said the local market currently was being driven by global sentiment.

“The market is saying it thinks the Reserve Bank (of Australia) is pretty much at the end of its cutting cycle but I think the market has got ahead of itself here, driven by stronger data out of the US, out of China, the UK and Europe,” Mr Linton said.

“I think we’re being priced on global sentiment which is much more upbeat, whereas when it comes to Australian sentiment, there are still big question marks.

“There’s potential for a significant rally in bond prices unless we get the bounce in Australia which we’re seeing elsewhere.”

At 0830 AEST on Tuesday, the September 10-year bond futures contract was trading at 95.935 (implying a yield of 4.065 per cent), up from 95.930 ( 4.070 per cent) on Monday.

The September three-year bond futures contract was at 97.040 (2.960 per cent), up from 97.030 (2.970 per cent).