AUSSIE BONDS: Little Changed, Modest Bull-Steepener For US Tsys

ACGBs (YM +2.0 & XM +4.0) are modestly stronger after US tsy futures claw back losses tied to President Trump's extension of the EU tariff pause. There was no cash trade in US tsys overnight.

• Cash ACGBs are 3-4bps richer.
• The bills strip richer, with pricing +1 to +3.
• RBA-dated OIS pricing is showing a 25bp rate cut in July as a 72% probability, with a cumulative 73bps of easing priced by year-end (based on an effective cash rate of 3.84%).
• Today, the local calendar will be empty.
• The focus of the week is likely to be Wednesday’s April CPI, which is forecast to moderate to 2.3% y/y from 2.4%. The trimmed mean has been around 2.7% y/y for four consecutive months. There will be limited updates to the services components being the first month of the quarter.
• Some of the components of Q1 GDP are also released this week, namely construction and private capex.
• April retail sales print on Friday and are projected to rise 0.3% m/m after increasing the same amount in March.
• The AOFM plans to sell A$400mn of the 4.25% 21 June 2034 bond today, with A$1200mn of the 4.25% 21 March 2036 bond on Friday.

Gold prices were slightly lower as risk sentiment improved with equities rallying following news that US-EU trade talks would continue until July 9 without any new tariffs. Bullion fell 0.4% to $3343.84/oz to be 1.7% higher this month. It has started today up 0.1% to $3347.30. The USD index was down slightly.

• Gold fell to a low of $3347.68 in early European trading after reaching a high of $3356.80 during the APAC session. Medium-term signals remain bullish with the bull trigger at $3500.1. Initial resistance is at $3365.9, 23 May high, while first level support is at $3276.4, 20-day EMA.
• On Friday US President Trump threatened the EU with 50% tariffs from June 1 because of his frustration at how slow negotiations were proceeding but after discussing the issues with EC President von der Leyen any additional tariffs were pushed back to July 9 to allow talks to continue. He also proposed 25% duties on Apple phones not made in the US. Increased trade tensions have supported gold prices.
• Equities rallied with the Eurostoxx up 1.3% and the S&P e-mini +1.3% (+1.1% today so far). Oil prices were little changed, copper +0.2% but iron ore down to just below $97/t. Silver was slightly higher at $33.49 and has started today down to $33.45.

• MNI: UK MAY BRC SHOP PRICES +0.2% M/M, -0.1% Y/Y