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Aussie bonds finish flat on US inflation

The Australian bond market finished flat as benign inflation in the US and New Zealand convinced traders interest rates would stay put in those economies.

A 0.1 per cent rise in the American consumer price index and a 0.3 per cent increase in New Zealand's equivalent measure of headline inflation, during the September quarter, made for a flat day on the local bond market, National Australia Bank's head of research Peter Jolly said.

"The inflation data has been a bit of support for the bond market," he said.

"This is the quietest day we've had for a fair while in Australia on the bond market - the last month has been pretty hectic in terms of volatility."

The small increase in US inflation also convinced the bond market that the US Federal Reserve could delay raising the federal funds rate, he added.

"We still have them moving in the middle of the year but for now there's no great urgency," Mr Jolly said.

At 1630 AEDT on Thursday, the December 2014 10-year bond futures contract was trading unchanged from Wednesday's close of 96.715 (implying a yield of 3.285 per cent).

The December 2014 three-year bond futures contract was at 97.430 (2.570 per cent), down from 97.440 (2.560 per cent).