CNH: Above 7.1300. China Mkts Remain Shut, Bessent Optimistic On Trade Talks

Aussie bond futures are little changed in the first part of Wednesday dealings. 3yr futures (YM) were last at 96.54, against yesterday's intra-session low of 96.515, which was a fresh low back to early August. 10yr futures (XM) hit fresh lows of 95.575 in earlier trade, but we sit back at 95.61 in latest dealings. 

• Given global weakness in back end futures from Tuesday, 10yr futures in Australia may remain the focus point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
• The US Treasury cash curve bear steepened in the return from the Labor Day weekend Tuesday, taking the lead of global peers and shrugging off soft US data. The early impetus in US Tsy futures this morning is a slightly stronger bias.
• In the cash Aussie government bond space, the early impetus is for a steeper curve, but aggregate moves are modest. The 3yr yield last near 3.44%, while the 10yr was close to 4.36%.
• On the data front, the final August PMI reads for the S&P Global services and composite PMI readings were firmer. Services printed at 55.8 against a 54.1 July read.
• Q2 GDP prints today and Bloomberg consensus is forecasting a 0.5% q/q increase bringing annual growth to 1.6% from Q1's 1.3%, in line with the RBA's August projection. However, almost all estimates were provided before this week's inventory, net export and public demand data. Inventories were close to consensus and net exports were in line.
• Also noted "Reserve Bank of Australia Governor Michele Bullock delivers an economics lecture in Perth." - BBG (which will be at 6pm AEST). 

Oil prices rallied again on Tuesday driven by technical buying. Also, US Treasury Secretary Bessent said that “all options are on the table” in response to Russia’s escalation of attacks on Ukrainian cities despite talks to come to a peace deal. He also cautioned China that 100% tariffs could be reimposed if it continues to buy Russian energy. Existing restrictions also need stricter enforcement. 

• Congress is continuing to look at an Act that would impose 500% tariffs on those who buy Russian energy. Less demand for Russian oil would increase it from other sources, thus pushing up global prices.
• Ukrainian attacks on energy infrastructure are also contributing as they drove Russian refining runs in August to their lowest since May 2022, according to Bloomberg.
• WTI rose 1.6% to $65.62/bbl following a high of $66.03, holding below initial resistance at $66.56, 4 August high. It has started today around $65.59. Gains are still considered corrective. The bear trigger is at $61.29.
• Brent was up 1.4% to $69.07/bbl after reaching $69.53 and is now up 2.4% this week. It breached resistance at $69.06 and if sustained the next level to watch is key resistance at $71.93. Initial support is at $64.50.

• RES 3: 146.53 - High Aug 6 
• RES 2: 141.48/142.95 - High May 2 / High Apr 7
• RES 1: 139.05 High Aug 4
• PRICE: 137.40 @ 16:00 BST Sep 2
• SUP 1: 137.00 - Round number support
• SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
• SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg

A bear threat in JGB futures remains present and the contract is trading  closer to its recent lows. A resumption of weakness would signal scope for an extension towards 136.57, a Fibonacci projection. The first important resistance to watch remains 141.48, the May 2 high. Clearance of this level would be viewed as a bullish signal. Initial short-term resistance is 139.05, the Aug 4 high. A breach would be a positive development for bulls.