CHINA PRESS: China Allows Special Treasury Bonds To Support Consumption
China has expanded the scope of ultra long-term special treasury bonds to promote equipment upgrades and trade-in of consumer goods to further boost consumption, Shanghai Securities News has reported following a State Council executive meeting. Consumption will remain the largest contributor and driving force for economic growth, said Lian Ping, chairman at the China Chief Economist Forum. Central and local governments should increase subsidies for the trade-in of durable consumer goods, and cooperate with banks to boost consumer loans to form policy synergies, said Wang Qing, analyst at Golden Credit Rating.
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AUSSIE 10-YEAR TECHS: (U4) Off Highs, But Still Firm
- RES 3: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.110 - High Dec 28 and the bull trigger
- RES 1: 95.923 - High Jun 14
- PRICE: 95.770 @ 16:25 BST Jun 21
- SUP 1: 95.235 - 76.4% retracement of the Nov - Dec ‘23 rally
- SUP 2: 94.965 - Low Oct 31 ‘23
- SUP 3: 94.866 - 2.618 proj of the Dec 28 - Jan 19 - Feb 2 price swing
The corrective rally in Aussie 10y futures persisted into last week’s close, with new highs printed at 95.923. Any resumption of weakness would signal scope for a move towards 95.235, a Fibonacci retracement point on the continuation chart. Key short-term resistance has been defined at 96.110 on the continuation chart. A firm break would highlight a possible reversal and signal scope for further gains.
USDCAD TECHS: Watching Support
- RES 4: 1.3977 High Oct 13 ‘23 and a key M/T resistance
- RES 3: 1.3899 High Nov 1 and a key resistance
- RES 2: 1.3846/55 High Apr 16 and the bull trigger / High Nov 10 2023
- RES 1: 1.3792 High Jun 11
- PRICE: 1.3711 @ 16:42 BST Jun 21
- SUP 1: 1.3675 Low June 21
- SUP 2: 1.3547 Low Apr 9
- SUP 3: 1.3512 50.0% retracement of the Dec 27 - Apr 16 bull cycle
- SUP 4: 1.3478 Low Apr 4
USDCAD has traded lower this week and has pierced the Jun 12 low of 1.3680, and 1.3676, the 50-day EMA. A clear break of these supports would signal scope for a continuation lower near-term, towards key support at 1.3590, the May 16 low. A clear break of this level would threaten a bullish theme. The trend outlook remains bullish, a resumption of gains would refocus attention on the medium-term resistance at 1.3846, the Apr 16 high.
US TSYS: Off Post-Flash PMI Lows, Triple Witching Ahead
- Treasuries are mildly weaker - back near early overnight levels following mixed global PMI levels. Treasuries extended support after soft French, German and Eurozone composite flash PMIs during early London hours -- but gapped lower after slightly higher than expected US flash PMIs in Mfg (51.7 vs. 51.0 est), Services (55.1 vs. 54.0) and Composite (54.6 vs. 53.5 est).
- Little reaction to a dip in May Existing Home Sales to 4.11m (cons 4.10m) after an unrevised 4.14m.
- Session lows were marked at midmorning (Sep'24 10Y at 110-11.5) and spent the rest of the session see-sawing off lows to 110-16.5 (-1), 10Y yield -.0098 at 4.2496%.
- Projected rate cut pricing remains steady to mildly lower vs. this morning's levels (*): July'24 at -10% w/ cumulative at -2.5bp at 5.302%, Sep'24 cumulative -17.6bp (-18.4bp), Nov'24 cumulative -26.6bp (-27.8bp), Dec'24 -46.7bp (-47.2bp).
- Cross asset focus on equity market triple witching expiration of quarterly stock options, index futures and index options and Nvidia swapping ETF weighting with Apple late Friday.
