AUSSIE 10-YEAR TECHS: (M6) Recovering

The AUD/USD had a range overnight of 0.7154-0.7210, Asia is currently trading around 0.7165. The AUD stalled above 0.7200 again and drifted lower as tensions rose in the Middle-East. “Project Freedom” did not last too long !! Disappointing the USD bears just as they looked to be getting the upper hand. On the day, while below 0.7225-0.7250 the range remains intact. The first support is toward 0.7150 and then 0.7080-0.7100 while the price continues to chop within the 0.7075-0.7225 range. RBA later today, with a hike expected.

• MNI RBA Preview: RBA Hike, CPI Too High: The RBA's 5 May decision is expected to be closely contested, with another split vote possible, though most analysts still expect a 25bp hike given persistent inflation, excess demand, and early signs of price pass-through from higher costs linked to the Iran war and Strait of Hormuz disruption.
• Danny Citrinowicz on X: “At some point, a basic decision has to be made: If the U.S. accepts that the current Iranian regime will remain in power, then it should pursue a realistic agreement based on existing frameworks, focused on nuclear constraints and regional de-escalation.”
• “If the U.S. seeks fundamentally different outcomes, then it must acknowledge what that entails: a long, costly campaign, potentially involving boots on the ground and months (or years) of sustained conflict.”   https://x.com/citrinowicz/status/2051405647355560015?s=20 
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.7100(AUD511m), 0.7200(AUD567m). Upcoming Close Strikes : 0.7050(AUD1.34b May 7), 0.7100(AUD1.14b May 8), 0.7250(AUD1.94b May 7) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 54 Points
• Data/Event: S&P Global Australia PMI’s, Household Spending, RBA

 Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

"*TRUMP, ASKED IF IRAN CEASEFIRE IS OVER: CAN'T TELL YOU THAT
"*TRUMP: IRAN WAR CAN GO ON FOR ANOTHER TWO TO THREE WEEKS
*TRUMP: TIME IS NOT OF THE ESSENCE FOR US
*TRUMP REITERATES IRAN MUST GIVE US ENRICHED URANIUM" - BBG
*TRUMP SPEAKS TO SALEM NEWS CHANNEL" - BBG

Despite economic data releases (factory orders / durable goods) being broadly in line with expectations, risk Sentiment Soured on UAE Missile Threat Headlines  
reporting that the UAE were intercepting missiles driving oil higher whilst equities and bond prices fell.  

The U.S. Treasury Department on Monday announced it expects to borrow US$189 bn in privately held net marketable debt in the second quarter, US$79 bn more than previously announced in February due to lower projected cash flows. Officials expect to borrow USD671 bn in 3Q, after USD577 bn in Q1

Cash is weak with yields up 5-8bps with the front end hammered Monday:

• The 2-Yr is up +7.5bps to 3.956%
• The 5-Yr is up +7.4bps to 4.09%
• The 10-Yr is up +6.8bps to 4.44%
• The 30-Yr is up +5.5bps to 5.018%

The 10-Yr and 30-Yr moves are significant, with both through key technical barriers (4.40% for 10-Yr and 5.018% for 30-Yr).  The move higher stalled at 4.46% for the 10Yr and will be the next tech level.  Above that there is limited support until 4.60% 

Projected rate pricing inches hawkish vs. late Friday lvls (*): Jun'26 at -0.7bp (-1.9bp), Jul'26 at -1.6bp (-2.9bp), Sep'26 at -0.5bp (-2.9bp), Oct'26 at +3.4bp (-3.4bp), Dec'26 +8.1bp (-1.3bp). April 2027 rises to near +20bp late Monday.

U.S. monetary policy is "well positioned" to balance rising risks New York Fed President John Williams said Monday.

The US 10-Yr bond future is up +01+ at the open at 110-07+ in early trade.