BOBL TECHS: (Z5) Bearish Theme Intact

• RES 4: 130.26 High Aug 8
• RES 3: 130.06 High Aug 14   
• RES 2: 129.83 50-day EMA
• RES 1: 129.51 20-day EMA 
• PRICE: 129.20 @ 05:46 BST Aug 25
• SUP 1: 128.64 Low Aug 15 
• SUP 2: 128.40 Low Apr 9
• SUP 3: 128.19 Low Mar 27 (cont) 
• SUP 4: 127.83 76.4% retracement of the Mar 11 - Apr 7 bull leg (cont)  

Bund futures are trading above their recent lows. A bear threat is present. The contract recently breached support at 128.84, the Jul 25 low and a bear trigger. Note that 129.00 marks the base of a broad range and a clear range breakout would strengthen a bearish threat. This would open 128.40 initially, the Apr 9 low. Strength above the 50-day EMA of 129.83, is required to signal a reversal. Resistance at the 20-day EMA is at 129.51.

ACGBs (YM +3.5 & XM +3.5) are stronger.

• Cash US tsys are ~2bps cheaper in today's Asia-Pac session after Friday's strong rally.
• Cash ACGBs are 3-4bps richer with the AU-US 10-year yield differential at +1bp.
• Bloomberg's updated consensus forecasts show that the RBA is widely expected to be on hold in September and that there will be one final cut for the year in Q4, likely November as that coincides with the RBA's revised outlook. Forecasters are split over 2026 though and where rates will trough with most projecting either 3.35% with no moves in 2026 or 3.1% with one last cut early next year. One of the main outliers is Westpac, which expects another rate cut in Q2 2026 with the cash rate then stabilising at 2.85%. AMP is forecasting the same path.
• The bills strip has bull-flattened, with pricing +1 to +4.
• RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in September is given a 29% probability, with a cumulative 36bps of easing priced by year-end.
• Tomorrow, the local calendar will see the RBA Minutes.
• This week, the AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond on Wednesday and A$1000mn of the 2.75% 21 November 2028 bond on Friday.

NZGBs closed showing a modest bull-steepener, with benchmark yields 1-3bps lower, after opening 5-6bps richer following the strong Friday for US tsys.

• Cash US tsys are ~2bps cheaper in today’s Asia-Pac session.
• NZGBs underperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield spreads 5bps and 3bps wider, respectively, on the day.
• Swap rates closed 2-3bps higher.
• (Bloomberg) “NZ Prime Minister Christopher Luxon said he personally agrees that the Reserve Bank should have cut the Official Cash Rate by 50 basis points last week.
• Luxon said he routinely meets with RBNZ Governor Christian Hawkesby before rate decisions to discuss how the economy is performing and that he suggested the bank should be more aggressive. Luxon emphasized that the Reserve Bank's independence is "sacrosanct" and that his conversations with RBNZ officials are constructive and do not involve directing the bank.”
• RBNZ dated OIS pricing closed slightly softer across meetings. 19bps of easing is priced for October, with a cumulative 36bps by November 2025.
• The local calendar will be empty tomorrow and Wednesday, ahead of Filled Jobs and ANZ Business Confidence on Thursday.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond and NZ$200mn of the 4.50% May-35 bond.