AUSSIE BONDS: Little Changed, July Cut Remains Almost Fully Priced

• Oil prices are down slightly today after finishing little changed yesterday. WTI is 0.5% lower at $61.24/bbl after reaching a high of $61.74 earlier. Brent is down 0.3% to $64.56 off the peak of $64.98. The market continues to monitor US trade talks especially with the EU but the focus now is on the May 31 OPEC meeting where another large output increase is expected to be agreed. The USD index is up 0.1%, which is probably moderately weighing.
• While energy markets remain concerned that the imposition of outsized tariffs would weigh on global energy demand, it is currently focussed on the impact of OPEC’s production plans on an already expected market surplus. The group increased output by over 400kbd in both April and June, more than expected. Apparently, a rise of a similar size is being discussed for July.
• There is key US data this week to gauge the strength of demand including orders (Tues), Q1 GDP revision (Thus), PCE (Fri), Trade (Fri) and Uni Michigan consumer confidence (Fri). There are also US crude & product data.
• Later the Fed’s Kashkari and Barkin appear. US April durable orders, May consumer confidence & Dallas Fed manufacturing index, March US house prices, French preliminary May CPI and euro area EC May survey are released. 

• RES 4: 132.56 High Feb 28 and a key resistance               
• RES 3: 131.72/132.03 High May 7 / High Apr 7 and the bull trigger     
• RES 2: 130.86 High May 9 Round number resistance 
• RES 1: 130.94 High May 23                     
• PRICE: 130.88 @ 05:45 BST May 27
• SUP 1: 129.49/13 Low May 22 / 15 and key short-term support             
• SUP 2: 129.02 Low Apr 10           
• SUP 3: 128.60 Low Apr 9 and a key support  
• SUP 4: 128.19 Low Mar 27 

The recovery in Bund futures that started May 15 suggests the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Initial resistance is last Friday’s high of 130.94. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.

Following yesterday's decline of -8.60%, China's BYD fell again today dragging the Hang Seng lower and impacting sentiment in the region.  BYD is down -3.6% today as concerns grow that its sales success hides the scale of discounting in China.  BYD announced price cuts of over 30% to stabilise the performance.  BYD stock had risen over 70% this year, putting the recent falls in context.  

In Korea holding companies are rallying with some up over 10% as expectations that a new president may be more shareholder friendly.  One of Malaysia's biggest banks Maybank quarterly earnings showed solid loan growth and a 4% rise in income for the first quarter.  With net foreign inflows of over $250m in May, Indonesia's Jakarta Composite is set to continue its recent run of good performance.  

• China's major bourses were all lower today with the Hang Seng down -0.18%, CSI 300 -0.55%, Shanghai -0.33% and Shenzhen down -0.65%
• The KOSPI fell -0.66% today as markets hold their breath ahead of the BOK this week.  
• The FTSE Malay KLCI fell again today, down -0.52% eighth day of losses out of the the last eleven trading days.
• The Jakarta Composite did very little today but remains over 6% better for the week.  
• The Straits Times in Singapore eked out modest gains of +0.13% and the PSEi in the Philippines was flat.
• The NIFTY 50 is down -0.88% yet is holding on to a +1.8% gain for the month to date.