JGBS: Futures Stronger Overnight, BOJ Gov. Ueda Speech Due

Gold prices rose further on Tuesday helped by weaker risk appetite but despite a stronger US dollar (BBDXY +0.5%) and higher yields. They were up 1.6% to $3533.16/oz after a new record of $3540.04 driven by Fed rate cut expectations and continued concerns over its independence. US manufacturing data printed slightly below expectations adding to the rally. The ruling on the removal of Governor Cook from the FOMC has been delayed to Thursday to allow the Justice Department more time for its submission.

• Gold is currently around $3527.8, just below resistance at $3539.7. The break above key resistance at $3500.1 confirms a resumption of the uptrend.
• Silver was 1.6% stronger at $40.883 off the intraday low of $40.142 and 2.9% higher this week. It is trading now around $40.88. With the trend remaining bullish, resistance to watch is $41.064.
• Equities were weaker with the S&P down 0.7% and Euro stoxx -1.4% but the S&P e-mini has started today up 0.1%. Oil prices were higher with WTI +1.6% to $65.62/bbl. Copper rose 1.1%. 

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.