OUTLOOK: Price Signal Summary - Bear Cycle In Gilts Still In Play

The G7 summit in Kananaskis, Alb. concludes later today after working sessions on support for Ukraine and energy security. The notable absence of US President Donald Trump will inevitably limit the ability of G7 leaders and those from the 'outreach partners' attending to achieve their main aims from the summit, given that it is with the US that so many countries are looking to either mitigate the impact of tariffs, ensure continued backing for Kyiv, or looking to influence a de-escalation in the Middle East. 

• The outreach partners (Australian PM Anthony Albanese, Brazilian President Luiz Inacio Lula da Silva, Indian PM Narendra Modi, Mexican President Claudia Sheinbaum, South African President Cyril Ramaphosa, South Korean President Lee Jae-myung, and Ukrainian President Volodymyr Zelenskyy) only due to attend the final stages of the G7 it means that none will have the chance to hold sideline bilateral talks with Trump, dealing a potentially severe blow to their entire aim for attending the summit.
• Albanese would have sought to gain Washington's assurances on AUKUS, for Zelenskyy commitments on military support and further mediation with Russia, for Ramaphosa an easing of tensions evident during his White House visit in May, for Lee and Sheinbaum a first in-person meeting, and Modi and Lula the opportunity to discuss tariffs and efforts to mitigate their worst impacts.  
• With all leaders at the G7 facing US tariffs, the summit could see the G7 and outreach partners seeking closer cooperation to mitigate Trump's actions, rather than looking to make deals with Trump if he had remained there in person.  

• In the FI space, Bund futures traded lower Monday, extending the reversal from Friday’s session high. For now, the move down is considered corrective and key short-term support to watch lies at 130.12, the Jun 5 low. A break of this level would highlight a stronger reversal and undermine the bullish theme. Key short-term resistance and the bull trigger, has been defined at 131.95, the Jun 13 high.
• A bullish condition in Gilt futures remains intact and Friday’s steep sell-off from the session high is - for now - considered corrective. The move higher last week marks an extension of the recent breach of resistance at 91.87, the May 20 high. This signals scope for a test of 93.73, a 1.764 projection of the May 22 - 27 - 29 price swing. Note the uptrend is in overbought territory, a deeper pullback would unwind this position. First firm support lies at 92.11, the 20-day EMA.

95% of respondent's to the World Gold Council's 2025 Central Bank Gold Reserves Survey believe total central bank gold reserves will rise over the next 12 months. In a similar vein, "a record 43% of respondents believe that their own gold reserves will also increase over the same period", while "none of our respondents anticipate a decline in their gold reserves.".

• The report notes that the "majority of respondents (73%) see moderate or significantly lower US dollar holdings within global reserves over the next five years. Respondents also believe that the share of other currencies, such as the euro and renminbi, as well as gold, will increase over the same period". These themes are consistent with the ECB's findings in its latest report on the Euro. See our write-up here.
• "The survey highlighted an uptick in respondents who actively manage their gold reserves, from 37% in 2024 to 44% in 2025. While enhancing returns remained the primary reason for this, risk management leapfrogged tactical trading as the second most selected reason".
• Respondents cited familiar reasons for holding gold: "Gold’s performance during times of crisis, portfolio diversification and inflation hedging are some key themes driving plans to accumulate more gold over the coming year. In addition, gold’s unique characteristics and role as a strategic asset continue to be valued by central banks: its performance in times of crisis, ability to act as a store of value, and its role as an effective diversifier".