AUSSIE BONDS: Cheaper, Narrow Ranges Ahead Of Key US Data

• RES 4: 132.56 High Feb 28 and a key resistance               
• RES 3: 132.03 High Apr 7 and the bull trigger     
• RES 2: 131.72 High May 7 
• RES 1: 131.44 High May 30                       
• PRICE: 131.20 @ 05:46 BST Jun 2
• SUP 1: 130.39 May 29 low              
• SUP 2: 129.49/13 Low May 22 / 15 and key short-term support
• SUP 3: 129.02 Low Apr 10 
• SUP 4: 128.60 Low Apr 9 and a key support

A bullish theme in Bund futures remains intact and the contract is holding on to its latest gains. The recent recovery suggests the move down between Apr 22 - May 15, has been a correction. A continuation higher would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Key short-term support to watch is 129.13, the May 15 low. First support lies at 130.39, the May 29 low.

Oil prices have defied the pullback in risk appetite from the increase in trade tensions and have rallied in relief that OPEC increased output as expected. There had been fears that it would be larger than the previous rises. The increase in geopolitical friction may also be providing some support with the relaxation of sanctions against Russia looking unlikely anytime soon. 

• WTI has trended higher through the session and is up 2.8% to $62.50/bbl, close to the intraday high of $62.70, holding around initial resistance at $62.54, 50-day EMA. Brent is 2.5% higher at $64.33/bbl after reaching $64.49 earlier (50-day EMA $65.41). The USD index is down 0.1%.
• OPEC agreed on Saturday to increase output 411kbd from July, the third increase of this size which is believed to be a message to overproducers. Apparently Russia, Oman and Algeria wanted a pause in output normalisation, according to Bloomberg. The next meeting is on July 6.
• Bloomberg reported that Morgan Stanley expects OPEC to increase production three more times. It is forecasting Brent to average $57.50 in H2 2025 and $55 in H1 2026. Goldman Sachs though is forecasting only one more output rise. They both continue to project excess supply.
• Ukraine attacked Russian airbases with drones destroying at least 40 bomber planes, according to the BBC. It appears to be in response to larger Russian attacks on Ukraine including Kyiv. Talks are due to take place today.
• Later the Fed’s Logan, Goolsbee and Chair Powell appear as well as ECB President Lagarde, BOE’s Mann & Greene. US May manufacturing PMI/ISM and April construction and European May manufacturing PMIs print. The focus this week will be on Friday’s US payrolls. 

With China closed today, it was left to the Hang Seng to give an indication as to sentiment and it was definitely a risk off day.  With uncertainty prevailing around the trade war, the US President had said over the weekend that China had violated a big part of the agreement made in Geneva whilst China hit back Beijing called on the US to correct 'discriminatory' measures and uphold the consensus reached in Geneva.  Adding further to the uncertainty is the news of further tariffs on steel and aluminium and plans to target China's tech sector.  

• With mainland bourses closed, the Hang Seng had centre state and fell  -2.20%to be the worst performer out of its regional peers.  
• The KOSPI had tried to rally early on but that faded away to be down by -0.35%.  
• In Singapore the FTSE Straits Times fell by -0.50% whilst the PSEi in the Philippines was one of the few gainers, up +0.35%
• After a negative week last week, the NIFTY 50 in India is opening weak again, down -0.65% despite better than expected GDP figures out for Q1.