BUND TECHS: (U5) Monitoring Support

ACGBs (YM +4.0 & XM +5.5) are trading stronger, but ranges have been relatively narrow on a data-light day.

• "Oil extended declines and US futures gained after Donald Trump said that Israel and Iran had agreed to a tentative ceasefire. Iran's foreign minister said no agreement has been made but that it would halt fighting if Israel stops." (BBG)
• Cash US tsys are ~1bp richer in today's Asia-Pac session. Today’s US calendar: Philadelphia Fed Non-Man Activity, Current Account Balance, FHFA House Price Index.
• Cash ACGBs are 4-6bps richer with the AU-US 10-year yield differential at -18bps.
• May CPI data is due tomorrow. Consensus expects it to ease to 2.3% y/y from 2.4%. Trimmed mean ticked up to 2.8% y/y in April and has been around 2.7-2.8% since December, suggesting a stalling in disinflation. The next RBA meeting is July 7-8.
• The bills strip is flat to +4, with late whites/early reds outperforming.
• RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in July is given an 85% probability, with a cumulative 76bps of easing priced by year-end.
• The AOFM plans to sell A$1000mn of the 3.50% 21 December 2034 bond tomorrow.

Gold prices fell to $3333.34/oz following US President Trump’s announcement of a ceasefire followed by an end to the Iran-Israel war as geopolitical risks eased. They are currently down 0.6% to $3349.2 and off the low, which briefly pierced initial support at $3338.8. 

• The end to the war in due at 0800 AEST Wed/2300 BST Tues/1800 EDT Tues. Iran’s military action was due to stop at 0500 BST but Israel reported more missiles at 0515 BST.
• With stronger risk sentiment dominating today, gold is not finding support from the weaker US dollar and lower US yields. The BBDXY USD is down 0.3%.
• Equities have rallied with the S&P e-mini up 0.6% and Hang Seng +2%. Oil prices are down with WTI -2.8% to $66.56/bbl as the geopolitical risk premium unwinds. Copper is 0.9% higher.
• Silver has trended higher and is currently up 0.2% at $36.16 off the intraday low of $35.61 reached early in the session. It is now down 0.4% over the last week but technicals suggest this is corrective and a bull wave remains in play. Initial support is at $35.49 and resistance at $37.32.
• Later Fed Chairman Powell gives the semi-annual policy testimony and is expected to be questioned on the unchanged stance. Also the Fed’s Hammack, Williams, Kashkari, Collins and Barr speak. ECB President Lagarde appears as well as de Guindos and Lane.
• In terms of data, US June Philly non-manufacturing, Q1 current account, April house prices, June consumer confidence & Richmond Fed business sentiment are released. Germany’s June Ifo survey and Canada’s May CPI also print.

With fears of a broader Middle East conflict softening, risk markets rebounded today with the major equity bourses in the region leading the way with gains up +1.5%-+2.5%. 

• In China, the Hang Seng led the way rising +1.95% today for its biggest one day gain this month.  The CSI 300 followed it higher, rising by +1.09% whilst the Shanghai Comp rose +1.00% and the Shenzhen Comp up +1.53%.
• The TAIEX in Taiwan is very strong, gaining +1.9%.
• Korea's KOSP was a standout today rising +2.6% for its strongest gain in three weeks and more than erasing yesterday's losses.
• The FTSE Malay KLCI hardly moved today, and didn't join in the rally falling just -0.02%
• The Jakarta Composite was strong rising +1.18%
• The FTSE Straits Times  in Singapore is up +0.49% whilst the PSEi in the Philippines is up +1.49%
• The NIFTY 50 is up +0.94% in morning trade following yesterday's loss of -0.56%