BONDS: NZ-US 10Y Diff Highest Since Late May Ahead Of Q2 CPI Data Tomorrow

• RES 3: 95.568 - 61.8% retracement Oct’ 25 - Jan’ 26 downleg (cont)
• RES 2: 95.465 - 50.0% retracement Oct’ 25 - Jan’ 26 downleg (cont)
• RES 1: 95.395/425 - High Mar 2 & Dec 1 ‘25 (cont)
• PRICE: 95.140 @ 16:39 BST Jun 19
• SUP 1: 94.985 - Low Jun 09
• SUP 2: 94.664 - 76.4% retracement of the 2008 - 2020 rally
• SUP 3: 94.018 - 1.0% 10-dma envelope

The latest pullback in Aussie 10-yr futures was confirmed as corrective, keeping the short-term bull cycle in play. Any further gains would pave the way for a climb towards 95.395, the Mar 2 high. The short-term bull trigger is 95.160, the May 29 and Jun 1 high. For bears, a stronger reversal would instead open 94.780, the Mar 23 low. A break of this level would highlight an important medium-term bearish development.

May PSNB-ex came in at GBP23.29bln (GBP23.03bln Apr). May's figure GBP5.6bln higher than the OBR's forecast and GBP4.4bln above Bloomberg consensus, marking a second consecutive overshoot two months into the fiscal year, and the highest May borrowing figure since 2020.

• This leaves us tracking at GBP46.33bln YTD, now GBP7.72bln above the OBR forecast (versus GBP2.09bln higher in April). CGNCR-ex also surprised to the upside in May, more than offsetting the undershoot last month and leaving it tracking GBP7.7bln above the OBR's forecast fiscal-year-to-date.
• The PSNB-ex overshoot in May is again more expenditure-driven, and central government receipts were also less favourable than the OBR's forecast (vs a touch stronger last month).
• Central govt net expenditure is now GBP4.01bln higher than the OBR's forecast YTD (vs GBP1.58bln higher in April), as interest payments overshot by GBP2.37bln, net social benefits by GBP1.11bln, and consumption expenditure by GBP1.21bln. Net current grants undershot the forecast by GBP1.26bln YTD, with other components generally closer to forecast.
• As for receipts, central govt current receipts stood at GBP172.21bln YTD in May, now GBP0.86bln below the OBR's forecast (vs GBP0.28bln higher last month), much closer to being in line than expenditures, but now seeing a small undershoot.
• Within receipts PAYE income tax was GBP0.69bln above forecast YTD and NICs GBP0.47bln higher. These were offset by VAT receipts maintaining a GBP0.41bln undershoot and self-assessed income tax receipts GBP0.20bln lower than forecast. There is more divergence from the OBR forecasts here this month, while in April most receipts were broadly in line with forecast/
• CGNCR-ex, after surprising to the downside last month, stood at GBP25.31bln in May, a notable GBP10.22bln above the OBR's forecast, more than offsetting the GBP6.64bln undershoot last month. Year-to-date, this leaves it tracking at GBP40.84bln, GBP3.76bln above the OBR's forecast. While the single-month overshoot here is pretty large, the May single-month figure is broadly in line with the previous two years (GBP 24.05bln last year, GBP24.57bln in FY2024/25).

• RES 4: 2.0% 10-dma envelope
• RES 3: 1.4292 61.8% Retracement Feb’25 - Jan’26 downleg
• RES 2: 1.4249 3.0% Upper Bollinger Band
• RES 1: 1.4183 High Jun 19
• PRICE: 1.4179 @ 16:57 BST Jun 19
• SUP 1: 1.3951 Low Jun 15  
• SUP 2: 1.3891 20-day EMA
• SUP 3: 1.3815 50-day EMA
• SUP 4: 1.3731 Low May 20 

USDCAD has built further on recent gains, with Friday’s push higher resulting in a print through the 50% retracement of the Feb’25 - Jan’26 downleg at 1.4137. Trend themes in both the short- and medium-term point higher, pressuring markets toward vol-band resistance layered into 1.4249 before the longer-term upside target at 1.4292, the 61.8% retracement of the Feb’25 - Jan’26 downleg. This month’s price action has helped the price walk the upper 2.0% Bollinger Band, with very little sign of retracement - affirming the bullish theme. Key support remains the 1.3815 50-day EMA.