AUSSIE BONDS: Cheaper On A Subdued Data Light Session

China's major bourses were among the regional leaders today as news filtered in on positive steps from the US China discussions.  The KOSPI followed suit hitting highest since the end of 2021 led by chip makers hopeful of a trade resolution.  Hong Kong listed China Rare Earth surged over 12% on the hope that trade tensions could ease.  

• The Hang Seng led the way for the major Chinese bourses, erasing yesterday's losses to be up +0.95%.  The CSI 300 followed suit rising +0.82%, the Shanghai Comp +0.54% and the Shenzhen Comp +0.72%.  
• The KOSPI is in fast approaching the 3,000 mark at 2,898 and rose +0.94% today, following yesterday's gains of +0.56%
• The FTSE Malay KLCI is up +0.49% more than erasing yesterday's losses.  
• The Jakarta Composite's gains of +1.65% yesterday were forgotten today as it fell -0.40%.
• The FTSE Straits Times fell -0.54% whilst the PSEi in the Philippines rose +0.45%
• The NIFTY 50 has eked out modest gains this morning of +0.20% and is on its sixth consecutive day of positive results.  

• RES 4: 132.00 Round number resistance               
• RES 3: 131.85 High Apr 22 and the bull trigger     
• RES 2: 131.50 High May 7 
• RES 1: 131.47 High Jun 5                       
• PRICE: 130.82 @ 05:34 BST Jun 11
• SUP 1: 130.12 Jun 5 low              
• SUP 2: 129.30/13 Low May 22 / 15 and key short-term support
• SUP 3: 128.97 Low May 14  
• SUP 4: 128.40 Low Apr 9 

The latest pullback in Bund futures still appears corrective - for now - and the trend condition remains bullish. Moving average studies are in a bull-mode position highlighting a dominant uptrend. A resumption of gains would signal scope for a climb towards 131.85, the Apr 22 high and a key resistance. Key short-term support to watch is 128.97, the May 14 low. First support lies at 130.12, the Jun 5 low.

ACGBs (YM -5.0 & XM -2.0) are weaker after trading in narrow ranges on a local-data-light session.

• Cash US tsys are little changed in today's Asia-Pac session ahead of today's CPI data. Analyst unrounded estimates see core CPI inflation accelerating mildly to 0.27% M/M (median, 0.28% average) in May after 0.24% M/M in April. (See link)
• Focus has also been on US-China trade talks, with headlines from London crossing earlier. The market reaction has been fairly muted, with the main outcome being agreement to move forward with what was agreed at the Geneva talks in May (although both US and Chinese leaders need to sign off on implementation).
• Cash ACGBs are 2-4bps cheaper with a flatter curve and the AU-US 10-year yield differential at -20bps.
• The bills strip has cheapened, with pricing -2 to -3.
• RBA-dated OIS pricing is firmer across meetings today. A 25bp rate cut in July is given a 79% probability, with a cumulative 72bps of easing priced by year-end.
• Tomorrow, the local calendar will be empty apart from a speech from RBA Jacobs, Head of Domestic Markets Department – Australia’s Bond Market in a Volatile World – at the Australian Government Fixed Income Forum, Tokyo.