AUSSIE 10-YEAR TECHS: (U5) Follows Fade in Treasuries

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.960 - High Apr 7
• PRICE: 95.580 @ 16:46 BST Jul 16
• SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.707 - 1.0% 10-dma envelope

Aussie 10-yr futures traded under pressure for much of last week, keeping prices pressured and within range of the recent pullback lows. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. To the upside, a recovery of recent losses would shift attention to resistance at 96.207, a Fibonacci retracement point.

TYU5 reopens at 110-19, down 0-01 from closing levels in today’s Asia-Pac session.

• Overnight the US 10-year yield had a range of 4.4353% - 4.4893%, closing around 4.45%. 
• Treasury yields retraced some of their recent gains; this was led by the front-end causing the yield curve to steepen (2s10s +2.20 at 55.941, 5s30s +3.74 at 101.646).
• MNI FED: Beige Book: Inflation Seen Rising More Rapidly By Late Summer. The July Beige Book's description of inflation suggested relatively steady price pressures compared with the June report, though it seems that what were previously "plans" to pass through tariff-related costs to customers have begun to materialize. In probably the most important finding for the FOMC, the biggest price increases are yet to come.
• MNI US DATA: PPI Suggests Tariffed Pipeline Price Pressures Less Acute Than Feared. The June Producer Price Index report  was roundly softer than expected - and certainly than feared given the context of rising tariffs -  despite some upward revisions to prior. 
• (Bloomberg Economics) -- ‘CPI and PPI data for June came in soft, but components that feed into the Fed’s preferred inflation gauge — the core PCE deflator — show it will print hot, running at its fastest monthly pace since February. We preliminarily estimate June core PCE inflation at 0.30% month over month, up from 0.18% in May.”
• The 10-year yield has broken above 4.45% in response to the CPI Data, this implies price is likely to now turn its focus back to 4.65% and could see further paring back of longs. Support is now back towards the 4.35/40% area which has been the pivot in the larger 4.10% - 4.65% range.

USD/CNH followed broader USD shifts, as dollar sentiment was whipsawed by headlines/reports around whether US President Trump would fire Fed Chair Powell. USD/CNH got to lows under 7.1690 (on headlines Trump would fire Powell), before rebounding back to around 7.1850 as Trump said firing Powell was highly unlikely. The pair tracks near 7.1800 in early Thursday dealings. Spot USD/CNY finished up at 7.1785, while the CNY CFETS basket tracker rose a further 0.19% to 96.07 (per BBG). The index has now risen in 9 out of the last 10 trading sessions. 

• CNH's beta to broader USD shifts overnight remained modest relative to other majors. Notably, USD/JPY plunged as the initial fire Powell headlines crossed. Alongside downside pressure for both equities and front-end US yields, USDJPY rapidly sold off to an intra-day low of 146.92, around 225 pips off the overnight highs. The pair recovered though and tracks near 147.80/85 in early Thursday trade.
• CNH/JPY sits near 20.5860, off recent highs near 20.7640. EUR/CNH had an 8.3112/8.4050 range yesterday, tracking close to 8.3550 this morning, around the mid point. The bias for CNH remains to outperforms when broader USD trends are positive, and vice versa when the USD weakens.
• For spot USD/CNH, we remain broadly wedged between the 7.1500/7.2000 levels.
• The local data calendar just has June FDI data due today or tomorrow, while early next week the Loan prime rate outcomes are due (no change is expected).
• Bloomberg reported that: "President Donald Trump has softened his tone with China in an effort to secure a summit with Xi Jinping and a trade deal, according to people familiar with internal deliberations." (see this link for more details).