IRAN: Pakistan-Iran Cooperation Has Ceased Over Last Couple Of Weeks

The reclosure of the Strait of Hormuz over the weekend and verbal rhetoric from the Iranian side has weighed on Bund futures this morning. Bearish trend signals and the move down from the Apr 8 high reinforces a bear theme and highlights a dominant downtrend. Futures are -31 ticks at 125.79, after rallying to a high of 126.26 on Friday.

• 10-year Bund yields have oscillated between 2.90-3.10% since mid-March, remaining highly sensitive to Middle East headline flow. Yields are +3.5bps today at 3.00%.
• The curve has bear flattened, a familiar reaction to re-escalation news.
• 10-year EGB spreads to Bunds are up to 3bps wider, with BTPs unsurprisingly underperforming. Light underperformance for OLOs vs OATs after Belgium was downgraded by Moody’s on Friday.
• German PPI saw an energy-driven acceleration to -0.2% Y/Y (vs -1.2% cons, -3.3% prior) in March. Regional focus remains on survey data towards the end of this week.
• Weekend ECB speak provided further pushback against the need for an April hike. 

Figure 1: 10-year Bund Yields Since 2025 (Source: Bloomberg Finance L.P)

• Optimism surrounding the Middle East negotiations last week had allowed AUDUSD to rally 3.4% from last Monday’s low, culminating in the pair’s first print above 0.72 since 2022. However, the reversal higher for the dollar late Friday prompted this move to be short-lived, and the Aussie is the worst performing G10 currency to start the week, with spot easing back to 0.7150.
• While the AUD rally has been tempered somewhat, medium-term trend conditions remain bullish, and the topside focus is on the top of a bull channel drawn from the Apr 9 ‘25 low, which currently intersects at 0.7290. Initial support remains much lower at 0.7003, the 50-day EMA.
• In similar vein, AUDNZD continues to exhibit strong bullish momentum, with the pair remaining within 30 pips of recent cycle highs just above 1.22. New Zealand Q1 CPI will be released Tuesday local time, the next important input for the cross. 1.2344 remains a significant objective here, the 61.8% retracement of the 2011-2020 range.
• In Australia, the economic calendar is light this week, with the preliminary readings of April PMIs headlining Thursday. The domestic focus will be on next week’s Q1 CPI report, a key release ahead of the May 05 RBA policy meeting.

SFIM6 95.25p, bought for half in 10k.