Bond futures prices are firmer following a surprisingly weak reading on Chinese manufacturing activity.
The local market was weaker until the release of the HSBC purchasing managers' index showing a six-month low reading of 49.6 points in January, down from 50.5 in December.
The preliminary barometer of Chinese manufacturing activity was weaker than market expectations and also below the key 50 level signifying an expansion.
Westpac interest rate strategist Tim Jung said the news pushed up bond futures prices, with the Chinese data stirring concerns about Australian industry.
"With China being our number one trade partner, whatever is happening in the Chinese economy, particularly in the manufacturing side ... will have a direct impact on the Australian economy," he said.
"Any type of slowdown is always viewed quite nervously by the market."
At 1630 AEDT on Thursday, the March 2014 10-year bond futures contract was trading at 95.880 (implying a yield of 4.120 per cent), up from 95.865 (4.135 per cent) on Wednesday.
The March 2014 three-year bond futures contract was at 97.000 (3.000 per cent), up from 96.970 (3.030 per cent).