AUSSIE 10-YEAR TECHS: (M6) Bullish Theme

• RES 3: 95.568 - 61.8% retracement Oct’ 25 - Jan’ 26 downleg
• RES 2: 95.465 - 50.0% retracement Oct’ 25 - Jan’ 26 downleg
• RES 1: 95.425 - High Dec 1 ‘25 (cont)
• PRICE: 94.975 @ 16:16 BST May 11
• SUP 1: 94.780 - Low Mar 23
• SUP 2: 94.664 - 76.4% retracement of the 2008 - 2020 rally
• SUP 3: 94.038 - 1.0% 10-dma envelope

Aussie 10-yr futures traded on a more stable footing Friday after undergoing several spells of weakness mid-week. Prices broke through resistance-turned-support at 95.040, the 23.6% retracement of the upleg posted off the March low. Resistance in focus at 95.120 into 95.425, while 94.780 undercuts as support. 

Yields finished near to their session highs Monday, largely in reaction to the latest rejection of a new Iran peace offer, deemed by the US administration as ‘totally unacceptable and Trump threatening further military action.  President Donald Trump said the ceasefire between the US and Iran was on “massive life support” after he rejected Tehran’s latest peace offer.

This was enough to see yields spike and the 10-Yr easily break above 4.40%, which had been deemed a key technical resistance.  

•  The 2Y finished  at 3.956%   +6.9bps
• The 5Y finished  at 4.075%  +7.0bps
• The 10Y finished at 4.414%  +5.8bps
• The 30Y finished at 4.988% +5.1bps

Yields are at risk of a breakout here with little technical resistance now back to last week's high of 4.46% with April CPI pending.  

CPI forecasts are for a jump to +3.7% for April.  The last time we had a +3.7% print was September 2023 with the 10-Yr peaking not long after near 5%.  

Back then, CPI peaked  around that level then tailed off.  The current outlook is for CPI to continue to climb, suggesting the pathway to 5% could be a rapid one.  

The $58B 3Y note auction tailed: 3.965% high yield vs. 3.960% WI; 2.58x bid-to-cover vs. 2.68x prior.

Projected rate pricing inches mildly hawkish vs. late Friday lvls (*): Jun'26 at -1.3bp (-1.5bp), Jul'26 at -1.6bp (-3.1bp), Sep'26 at -0.7bp (-3.2bp), Oct'26 at +1.9bp (-1.1bp), Dec'26 +5.0bp (+1.5bp).

The 10-Yr bond future has opened flat in early trade at 110-12+

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