ASIA STOCKS: O/N Tech Lead; Yen Woes; BI Hike; India Valuations Questioned

ACGBs (YM flat & XM -1.5) are modestly weaker cheaper.

• Risk appetite has improved following a joint statement from mediators Qatar and Pakistan and comments on X from Iran's foreign minister Araghchi that progress had been made in US-Iran talks and that the technical team would continue to work out details through the week.
• Cash ACGBs are flat to 2bps cheaper with AU-US 10-year yield differential at +34bps.
• The bills strip pricing is -1 to -3 across contracts.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 37% for August to 65% by November and 68% by December 2026.  
• Today, the local calendar will see S&P Global PMIs ahead of May CPI on Wednesday.
• Wednesday’s May trimmed mean measure is expected to rise by 0.3% m/m and 3.5% y/y, following increases of 0.3% m/m and 3.4% y/y in April.
• Governor Bullock reiterated at the June press conference that underlying inflation remains the RBA’s primary focus. She also noted that April’s 3.4% trimmed mean outcome was broadly in line with the Bank’s expectations. The RBA’s May forecasts imply trimmed mean inflation of 3.8% y/y in Q2.
• The AOFM plans to sell A$1000mn of the 4.25% 21 October 2036 bond tomorrow.

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• RES 4: 127.74 1.00 proj of the May 18 - 29 - Jun 6 price swing  
• RES 3: 127.22 High Mar 10
• RES 2: 127.00 Round number resistance
• RES 1: 126.80 High Jun 17         
• PRICE: 126.11 @ 05:37 BST Jun 22
• SUP 1: 125.92 20-day EMA    
• SUP 2: 124.88 Low Jun 10 / 11 and a key S/T support
• SUP 3: 124.44 76.4% retracement of the May 18 - 29 rally 
• SUP 4: 123.93 Low May 20

For now, the latest pullback in Bund futures is considered corrective. Attention is on resistance at 126.63, the May 29 high and bull trigger. This hurdle has recently been pierced, a clear break of it would strengthen a bullish condition and confirm a resumption of the bull cycle that started May 18. This would open the 127.00 handle initially. Key S/T support lies at 124.88, the Jun 10 and 11 low. Initial support  is 125.92 20-day EMA.

NZGBs closed little changed after being 3bps cheaper early on fears that US-Iran negotiations would be derailed by the ongoing Israel-Hezbollah conflict.
• Risk appetite has improved following a joint statement from mediators Qatar and Pakistan and comments on X from Iran's foreign minister Araghchi that progress had been made in US-Iran talks and that the technical team would continue to work out details through the week.
• Brent started today reaching $82.30/bbl but then declined to a low of $78.69. It is currently down 1.6% to $79.31, holding above initial support at $75.94. August WTI is 0.4% lower at $75.51, off the intraday low at $75.01. It reached $78.14 at the start of trading.
• The NZ-AU 10-year was unchanged on the day.
• Swap rates closed flat to 2bps higher, with a steeper 2s10s curve.
• RBNZ-dated OIS pricing closed little changed across meetings. 21bps of tightening is priced for July, while February 2027 assigns 74bps.
• The local calendar will be empty until Filled Jobs data on Monday 29 June.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 2.00% May-32 bond, NZ$175mn of the 4.25% May-34 bond and NZ$50mn of the 2.75% May-51 bond.

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