BUND TECHS: (U5) Resistance Remains Intact

• RES 4: 118.030 High Jul 22 and a key resistance   
• RES 3: 117.687 50-day EMA 
• RES 2: 117.604 20-day EMA 
• RES 1: 117.460 High Jul 25       
• PRICE: 117.420 @ 05:30 BST Jul 29 
• SUP 1: 116.970 Low Jul 25 and a bear trigger   
• SUP 2: 116.840 Low Mar 18 (cont)
• SUP 3: 116.800 Low Mar 17 (cont) 
• SUP 4: 116.637 76.4% retracement of the Mar 6 - Apr 7 bull leg (cont)         

Bobl futures traded in a volatile manner last week and the contract pulled back from its Jul 22 high. The contract breached a key support at 117.200, the Jul 11 low, however price has recovered. A bullish candle pattern on Jul 25 and on Monday - a hammer formation followed by an engulfing signal - highlights a potential base. Initial resistance to watch is 117.604, the 20-day EMA. The bear trigger lies at 116.970, the Jul 25 low.

JGB futures are modestly stronger, +8 compared to the settlement levels.

• Today, the local calendar will be empty apart from 2-year supply.
• The 2-year bond auction showed strong results today. The low price printed stronger than the Bloomberg-surveyed forecast of 100.09, while the cover ratio increased to 4.4665x from 3.9028x. The auction tail also narrowed compared to last month.
• The Japan Times via BBG - "In an annual white paper on Tuesday the government underlined the need to take all possible measures to realize wage increases that outpace inflation. In an annual white paper on Tuesday the government underlined the need to take all possible measures to realize wage increases that outpace inflation."
• Cash US tsys are ~1bp richer in today's Asia-Pac session after yesterday's modest sell-off. Wednesday's FOMC announcement is widely expected to be a steady rate outcome.
• Cash JGBs are 1-2bps richer apart from the 30-year which is 1bp cheaper. The benchmark 2-year yield is 1.5bps lower at 0.825% versus the cycle high of 0.890%.
• Swaps are mixed, with rates flat to 1bp lower.
• Tomorrow, the local calendar will be empty ahead of the BOJ Policy Decision on Thursday.  

Oil has held onto most of Monday’s gains. It has trended gradually lower through the APAC session though with WTI now down 0.1% to $66.64/bbl, close to the intraday low, after reaching $67.09 early in trading. Brent is 0.1% lower at $69.96/bbl after a high of $70.28. They rose around 2.8% yesterday following US President Trump saying he will bring forward the deadline for an end to hostilities in Ukraine. If effective, the measures he has proposed against Russia, including on purchasers of its crude, could impact global oil supplies.

• Trump said he would bring the ceasefire deadline forward to 10-12 days from July 28. He appears to have lost patience with Russian President Putin saying he’s “not so interested in talking any more” after the latter has said one thing and done another. Trump said that he’ll likely make an announcement Tuesday. The original deadline was September 2.
• With OPEC meeting on August 3 to decide its output target for September and sanctions & trade remaining in focus, attention remains on fundamentals. US industry-based inventory data is released later Tuesday and will be monitored for signs of weakness in demand.
• Later preliminary June US trade, May house prices, July consumer confidence and June JOLTS job openings are released. There is also preliminary Q2 Spanish GDP.