JGBS: Sharp Bear Flattener, Q2 GDP Tomorrow

• RES 4: 131.95 High Jun 13 and the bull trigger
• RES 3: 131.33 High Jun 20  
• RES 2: 130.76 High Jul 4
• RES 1: 130.06/130.31 20- and 50-day EMA values
• PRICE: 129.28 @ 05:36 BST Jul 15
• SUP 1: 129.08 Low Jul 14 
• SUP 2: 128.97 Low May 14 and a reversal trigger
• SUP 3: 128.90 Low Apr 10 
• SUP 4: 128.40 Low Apr 9

Bund futures are trading closer to their recent lows and a bear cycle remains intact. Last Friday’s extension resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.31, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.

• As President Trump takes aim at Russia, global risk sentiment is challenged.  
• This has given gold a boost and it has rallied today in the Asia trading day to take back yesterday's losses.  
• At US$3,360.48 gold is not far from its early June year highs and remains in a strong technical position with all major moving averages modestly upward sloping.  

• Gold sits above all major moving averages, the nearest being the 20-day EMA of $3,336.90. 

  

  source: Bloomberg Finance LP / MNI 

NZGBs closed showing a modest bear-steepener, with benchmark yields 1-2bps higher. Ranges were narrow. The NZ-US 10-year yield differential is unchanged on the day at +15bps. 

• Cash US tsys are little changed ahead of today’s US CPI data. 
• “We expect an ageing population to put downward pressure on the neutral interest rate, but other factors may offset its impact,” the RBNZ said in a report published Tuesday in Wellington. Any impacts are likely to be gradual over decades, it said.” (per BBG)
• Swap rates closed 1bp higher.
• RBNZ dated OIS pricing closed little changed across meetings. 19bps of easing is priced for August, with a cumulative 33bps by November 2025.
• Tomorrow, the local calendar will see Non-Resident Bond Holdings data.
• On Thursday, the NZ Treasury plans to sell NZ$200mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.