JGB TECHS: (U5) Returns Toward Lows

• Bank of Korea to Sell KRW1tn 3-Year Bonds
• Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
• Vietnam To Sell VND 3.5Tln 2030 Bonds; (TD2530009)
• Vietnam To Sell VND 2.0Tln 2040 Bonds; (TD2540037)
• Vietnam To Sell VND 6.0Tln 2035 Bonds; (TD2535021)
• Thailand to Sell THB15bn of 2035 Bonds
• Thailand to Sell THB18bn of 2045 Bonds
• Bank Indonesia to Sell 31D SUVBI Bills
• Bank Indonesia to Sell 185D SUVBI Bills
• Bank Indonesia to Sell 94D SUVBI Bills
• Bank Indonesia to Sell 367D SUVBI Bills
• Bank Indonesia to Sell 276D SUVBI Bills
• China to Sell CNY170bn 2030 Bonds
• India to Sell CNY90bn 91-Day Bills
• India to Sell CNY50 bn 364-Day Bills
• India to Sell CNY50bn 182-Day Bills
• South Korea to Sell KRW2tn 63-Day Financial Bills

Oil jumped over 5% on Tuesday on prospects of the US assisting Israel in its attacks on Iran after President Trump left the G7 early. This would increase the risks of a disruption to fossil fuel supplies from the region. He has demanded that Iran surrender but said that they won’t assassinate the Ayatollah “for now” but his patience with Iran is “wearing thin”. Prices were also supported by news of a large US inventory drawdown last week. The USD index is up 0.5%.

• An escalation of the conflict especially if the US gets involved could prompt Iran to disrupt tankers through the Strait of Hormuz which carries 30% of global seaborne oil and 20% of LNG. This scenario would drive a sharp rise in oil prices.
• Shipping is already being impacted with new bookings not taken and the conflict resulting in navigational equipment jammed, which resulted in two tankers colliding and catching fire off the coast of the UAE.
• WTI rose 5.2% to $75.49/bbl, close to the intraday high of $75.54, which is still below the $77.62 peak reached following news of the first Israeli strike. The benchmark is up 11% since then and 24.2% this month. It is currently trading around $75.64.
• Brent increased 5.4% to $77.16 to be up 22.9% in June. While prices are likely to remain volatile, bullish conditions remain. Initial resistance is at $78.50, 13 June high, while support is $70.41, 13 June low.
• Bloomberg reported that there was a sharp fall in US oil stocks of 10.1mn barrels last week, according to people familiar with the API data. Gasoline inventories fell 200k while distillate rose 300k. The official EIA data is out later today.
• A tax break for oil and gas producers worth $1.1bn over 10 years has been added to Trump’s tax bill by senate Republicans. It would allow them to deduct particular drilling expenses from taxable income.