OIL: Oil Heading for Large Weekly Fall

Gold made lows just under $3316 in the first part of trade, where liquidity was lighter amid strong USD gains. We stabilized since then but found selling interest above $3386. We last racked near $3340, still off 1.20% for the session. 

• Gold has been moving in lock step with USD weakness recently, so it no surprise that we have corrected lower for bullion as USD sentiment has stabilized. Trump remarks, particularly around having no intention to fire Fed Chair Powell, has aided USD sentiment, but we sit off earlier highs though for the BBDXY index (last under 1224).
• Gold is still in a technical bullish uptrend though. Focus will be on re-testing $3500 on the upside. Initial firm support lies at $3163.5, the 20-day EMA. 

Asia Pac equity markets are all in the green, led by tech related plays and Hong Kong markets. We had strong cash gains in US markets on Tuesday, while US futures are firmly in the first part of Wednesday trade. Trump remarks have dominated sentiment, with the US President stating he had no intention of firing Fed Chair Powell (which has been a source of concern for markets recently), while also stating final tariff levels on China will be lower than the 145% that currently prevails. This followed reported comments from US Tsy Secretary Bessent that the tariff standoff is unsustainable, and he expects de-escalation with China.

• Eminis are up over 1.5%, but the contract has been unable to sustain +5400 levels. A move into 5500/5600 region would likely be needed to unnerve recent shorts for this benchmark. Nasdaq futures are +1.8% at this stage.
• Japan markets are up over 2% at this stage, with the NKY 225 trending back towards 35000. The Taiex has outperformed in Taiwan up nearly 4%, while the South Korean Kospi is up around 1.5%, above 2500 in index terms.
• Hong Kong markets have the HSI up 2.4% at the break, with the tech sub index over 3%.
• Despite appearing to soften his stance on China, onshore China markets are only a touch higher at this stage. The CSI 300 up +0.22%, lagging the gains seen elsewhere.
• Trends are slightly more modest in SEA markets, the Singapore Straits Times up around 1%, same too for JCI in Jakarta, +1.2%. Gains elsewhere though are under 1%, while Philippine markets are down slightly. 

TYM5 has traded higher with a range of 110-20 to 111-00+ during the Asia-Pacific session. It last changed hands at Heading 110-29, up 0.04 from the previous close.

• The US 10-year yield is drifting lower, dealing around 4.34%, down from its open around 4.40%
• The US 2-year yield is unchanged, dealing around 3.81%
• Risk has reversed higher as Trump makes a U-turn saying he won’t fire Powell and made comments that seemed to soften his stance towards China.
• Block Curve flattener flows : SELL 8200 of USM5 traded at 108-06, post-time 01:25:20 BST (DV01 $353,017). BUY 2800 of USM5 traded at 114-22, post-time 01:25:20 BST (DV01 $353,492).
• 10-year Yields, having bounced off their support around the 4.25 area, yields are consolidating with the range looking something like 4.25/4.50% for now.

• Data/Events : US S&P Global Services & Manufacturing PMI, New Home sales