BUND TECHS: (U5) Bear Cycle Remains Intact

ACGBs (YMU5 -8.0 & XMU5 -9.0) are weaker and hovering at/near Sydney session lows on a data-light day. 

• Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session. As we head into the June Fed meeting week, the next cut is only fully priced by the October FOMC meeting, with September seeing a roughly 80% implied probability. Exactly 50bp of cuts are priced through end-2025, implying two Q4 cuts.
• Cash ACGBs are 6-8bps cheaper with the AU-US 10-year yield differential at -19bps.
• The bills strip has cheapened, with pricing -2 to -7.
• RBA-dated OIS pricing is firmer across meetings today. A 25bp rate cut in July is given an 83% probability, with a cumulative 78bps of easing priced by year-end.
• Tomorrow, the local calendar will be empty.  The highlight of the week will be May jobs data on Thursday. Bloomberg consensus sees a 20k rise in new jobs, in line with the 3-month average, with the unemployment and participation rates stable at 4.1% and 67.1% respectively.
• The AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond tomorrow, A$900mn of the 2.75% 21 June 2035 bond on Wednesday and A$800mn of the 1.00% 21 December 2030 bond on Friday.

Despite the Israel - Iran conflict driving volatility across financial markets, there was an even mix of results across major Asian bourses today with the KOSPI one of the best performers.  China's bourses struggled as data released showed the struggle for housing continues.  

• The Hang Seng was down -0.12% and remains lower over the last week.  The CSI 300 followed its lead, lower by -0.06%.  The Shanghai Comp struggled into positive territory rising +0.05% and Shenzhen was the best performer rising +0.34% yet too remains lower over the last week.  
• The KOSPI is strong, up over 1% as is the best performer of the major bourses over the last week.  
• The FTSE Malay KLCI is down -0.27% and the Jakarta Composite flat.  
• The FTSE Straits Times in Singapore is lower by -0.30% and the PSEi in the Philippines lower by -0.56%.
• Having finished Friday down -0.68%, the NIFTY 50 in India is eking out gains Monday rising by +0.20%

The BBDXY has had a range of 1202.92 - 1204.92 in the Asia-Pac session, it is currently trading around 1204. Japan and the EU plan to step up defense-industry cooperation, with officials and private-sector representatives set to meet Monday, Nikkei reported“(BBG). CHINA Retail Sales Strong with Urban Leading: The retail sales figures for May confirm the strength of the consumer that supports an improving domestic economy. Urban retail sales grew strongly, expanding by +6.5% whilst rural increased to +5.4%.

• EUR/USD -  Asian range 1.1524 - 1.1548, Asia is currently trading 1.1535. EUR has rejected the move above 1.1600 but dips should continue to find demand, first support back towards the 1.1400 area then 1.1100/1200. EUR/USD looked to have broken the pivotal 1.1500 area last week, this needs to be sustained to signal a larger move higher.
• GBP/USD - Asian range 1.3535 - 1.3567, Asia is currently dealing around 1.3545. The GBP looks to have failed to hold onto its upward momentum as it attempts to sustain a break above its pivotal Weekly resistance. First support seen back towards 1.3400/50.
• USD/CNH - Asian range 7.1843 - 7.1904, the USD/CNY fix printed 7.1789. Asia is currently dealing around 7.1850. Sellers should be around on bounces while price holds below the 7.2500 area. 
• Cross asset : SPX +0.15%, Gold $3430, US 10-Year 4.425%, BBDXY 1204, Crude oil $73.80

• Data/Events : Italy CPI, EZ Labour Costs

  Fig 1: GBP/USD Spot Hourly Chart

  

  Source: MNI - Market News/Bloomberg Finance L.P