AUSTRALIAN BOND MARKET OPENS FIRMER - MAY 1, 2008.

SYDNEY, May 1 Asia Pulse - The Australian bond market opened firmer today after the US Federal Reserve cut a key interest rate for the seventh time in seven months.

But the accompanying monetary policy statement convinced the market the US Fed was not at the end of its rate cut cycle, which sparked a rally in US Treasuries even though the rate decision was widely expected.

At 0830 AEST, the yield on the Commonwealth Government February 2017 bond was at 6.240 per cent, down from yesterday's close of 6.275 per cent, while the August 2010 bond was flat at 6.470 per cent.

On the Sydney Futures Exchange, the June 10-year bond futures contract price was at 93.740, up from yesterday's close of 93.695, while the June three-year contract price was at 93.640, up from yesterday's close of 93.595.

Safe-haven assets rallied overnight after the US central bank's Federal Open Market Committee announced a 25 basis point cut to the federal funds rate, which is now at two per cent for the first time since December 2004.

The decision, announced at 0415 AEST, was the seventh cut to the key US interest rate since September.

US Treasuries rallied after the US Fed announcement, with 10-year bond yields falling by 10 basis points to 3.72 per cent and two-year yields diving by nine basis points to 2.26 per cent.