The Australian bond market is weaker on profit-taking following Tuesday's rally to record highs after the bigger than expected cut to official interest rates.
At 1630 AEST on Wednesday, the June 10-year bond futures contract was trading at 96.410 (implying a yield of 3.590 per cent), down from 96.510 (3.490 per cent) on Tuesday.
The June three-year bond futures contract was at 97.090 (2.910 per cent), down from 97.190 (2.810 per cent).
The ten-year bond futures contract rose to an all-time high of 96.530 (implying a yield of 3.470 per cent) on Tuesday after the 50-basis point cut to the cash rate by the Reserve Bank of Australia (RBA).
UBS interest rate strategist Matthew Johnson said bond futures prices fell throughout most of Wednesday but rose in late afternoon trade after the National Australia Bank (NAB) cut its variable home loan rates by 0.32 percentage points.
"The market was trading a bit soft after the big rally after RBA and just now on the announcement that the NAB cut its rate by only 32 basis points the market has got a bit of a bid tone back," Mr Johnson said.
NAB was the first of the big four banks to cut its rates but only by passed on part of the 50-basis point cut by the RBA that took the cash rate to 3.75 per cent.
Mr Johnson said he expected bond futures prices to set fresh records as the futures market prices in, or bets, on more RBA rate cuts.
"If the RBA is only going to get 32 points through when they cut by 50 points, then it doesn't make market pricing look very stretched at all really," he said.
Mr Johnson said bond markets would focus on US private sector payrolls data for April to be published on Wednesday night (Australian time).