AUSSIE BONDS: Cheaper & Near Session Lows After RBA Gov Discusses Mon Pol

JGB futures are weaker, down 10 ticks from settlement levels, but have retraced some of the earlier cheapening seen in the Tokyo afternoon session following the release of today’s 20-year auction results.

• The 20-year JGB auction delivered mixed results across key metrics. The low price underperformed dealer forecasts, according to a Bloomberg poll. However, the cover ratio increased to 3.1007x (highest since March) from 2.5007x in the previous auction, and the auction tail shortened dramatically to 0.28 from 1.14 – the longest since 1987.
• Cash US tsys are ~1bp richer in today's Asia-Pac session. Later today, Fed Chairman Powell gives the semi-annual policy testimony and is expected to be questioned on the unchanged stance. Also, the Fed’s Hammack, Williams, Kashkari, Collins and Barr speak. Today's US calendar: Philadelphia Fed Non-Man Activity, Current Account Balance, FHFA House Price Index.
• Cash JGBs are little changed across benchmarks out to the 10-year and 1bp richer beyond. The benchmark 20-year yield is 1.3bps lower at 2.346% after today's supply.
• Swap rates are flat to 1bp higher.
• Tomorrow, the local calendar will see PPI Services and Coincident/Leading Index data alongside BoJ Summary of Opinions (June MPM) and a speech from BoJ Board Tamura. 

• RES 4: $85.00 - Round number resistance 
• RES 3: $83.46 - 2.764 proj of the Apr 9 - 23 - May price swing
• RES 2: $82.13 - 2.618 proj of the Apr 9 - 23 - May price swing
• RES 1: $74.82/81.40 - 50.0% of the Jun 23-24 range / High Jun 23   
• PRICE: $69.50 @ 05:56 BST Jun 24
• SUP 1: $68.13 - 50-day EMA 
• SUP 2: $62.09 - Low May 30
• SUP 3: $58.20 - Low May 5
• SUP 4: $57.78 - Low Apr 9 and a key support   

Brent futures traded sharply lower yesterday. For now a bull cycle remains in play, however, price action is likely to remain volatile. The pullback has allowed an oversold condition to unwind and at this stage, support at the 50-day EMA, at $68.13, remains intact. A clear break of the average would signal scope for a deeper retracement. Initial resistance to watch is $74.82, the 50.0% retracement of the Jun 23 - 24 high-low range.

ACGBs (YM +4.0 & XM +5.5) are trading stronger, but ranges have been relatively narrow on a data-light day.

• "Oil extended declines and US futures gained after Donald Trump said that Israel and Iran had agreed to a tentative ceasefire. Iran's foreign minister said no agreement has been made but that it would halt fighting if Israel stops." (BBG)
• Cash US tsys are ~1bp richer in today's Asia-Pac session. Today’s US calendar: Philadelphia Fed Non-Man Activity, Current Account Balance, FHFA House Price Index.
• Cash ACGBs are 4-6bps richer with the AU-US 10-year yield differential at -18bps.
• May CPI data is due tomorrow. Consensus expects it to ease to 2.3% y/y from 2.4%. Trimmed mean ticked up to 2.8% y/y in April and has been around 2.7-2.8% since December, suggesting a stalling in disinflation. The next RBA meeting is July 7-8.
• The bills strip is flat to +4, with late whites/early reds outperforming.
• RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in July is given an 85% probability, with a cumulative 76bps of easing priced by year-end.
• The AOFM plans to sell A$1000mn of the 3.50% 21 December 2034 bond tomorrow.