The Australian bond market opened stronger on Tuesday after weak manufacturing data overnight raised doubts about US economic recovery.

At 0830 (AEST) on Tuesday, the September 10-year bond futures contract was trading at 95.185 (implying a yield of 4.815 per cent), up from 95.095 (4.905 per cent) on Monday.

The September three-year bond futures contract was at 95.560 (4.440 per cent), up from 95.490 (4.510 per cent).

The Institute for Supply Management, a trade group of US purchasing executives, said its index of manufacturing activity in June fell to its lowest level since July 2009.

ANZ Banking Group senior rates strategist Tony Morriss said US bond prices rose overnight to their highest levels this year after the poor manufacturing data.

The weak data comes as the US government is about to start cutting spending – a further drag on economic growth, which was part of the deal made by politician to raise the their debt ceiling.

Mr Morriss said this is likely to give US bonds a further boost.

“It’s been pretty volatile over the last few days, not just because of the machinations in Washington but of course some of the data from the United States,” Mr Morris said.

“You’d think even a modest cut in spending from the US (government) would be another headwind for their economic recovery.”

The board of the Reserve Bank of Australia (RBA) meets on Tuesday, with its interest rate decision to be announced at 1430 AEST).

Of the 15 economists surveyed by AAP last week, 12 expected the central bank to keep the cash rate on hold at 4.75 per cent.

“Our view is that they will hike rates, but the market is not putting a high probability on that outcome. The global outlook is pretty weak,” Mr Morris said.