AUSSIE 10-YEAR TECHS: (Z5) Reversal Lower Extends

• -5,000 FVZ5 109-14, sell through 109-14.25 post time bid at 1418:10ET, DV01 $223,000.
• The 5Y contract trades 109-14 last (+4.25)

• Oil prices found support on Wednesday, supported by a slightly larger than expected US crude stock draw.
• A breakdown in E3 talks with Iran also added support earlier in the session, along with growing threats from the EU to further sanctions on Russia – though its options remain limited.
• WTI Oct 25 is up by 1.4% at $64.2/bbl.
• A bear cycle in WTI futures remains intact and the latest round of short-term gains appear corrective - for now.
• Initial support is at $61.99, the Jun 30 low, which has recently been breached, strengthening a bearish theme. Initial resistance to watch is at $66.56, the Aug 4 high.
• Elsewhere, spot gold is broadly unchanged on the session around $3,395/oz, after rallying off session lows following the IAEA-Iran headlines that flagged that monitors have not yet returned to damaged Iranian sites. Reports also suggested that Iran isn’t providing adequate access to inspectors.
• The medium-term trend condition for gold remains bullish, with initial resistance seen at $3,409.2, the Aug 8 high, followed by $3,439.0, the Aug 23 high.
• Meanwhile, copper has fallen by 0.9% to $449/lb today.
• Copper futures are in consolidation mode, with initial resistance at $488.17, the 50-day EMA. On the downside, a continuation lower would signal scope for a test of key support at $418.85, the Apr 7 low.

OATs underperformed for a 3rd consecutive session as French political concerns lingered.

• Core EGBs and Gilts gained in morning trade, the latter after registering fresh cycle lows at the open, amid a bit of risk-off with equities sagging.
• Impactful data was limited, but regional politics were a key focus, with France's Sep 8 no-confidence vote continuing to weigh on OATs (the Dutch government survived a no-confidence motion of its own today, though this was expected).
• Outright OAT yields hit recent highs with 30Y seeing yields hit a 14-year high, as spreads to Bunds continued to widen.
• Trade turned more constructive going into the close, with OATs seemingly finding a footing, boosting Bunds and Gilts (as well as Treasuries).
• The belly outperformed on the German curve (despite a soft 7Y auction), with yields down throughout, while the UK curve saw yields drop more or less in parallel.
• Thursday's data schedule includes consumer and business confidence for Italy and the Eurozone, along with an appearance by the ECB's Rehn and the account of the July ECB meeting.
• The week's regional focus - the Eurozone August flash inflation round - technically starts Thursday (Belgium is due) but most attention will be on Friday's releases for Spain, France, Italy, and Germany. MNI's preview is here.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.3bps at 1.915%, 5-Yr is down 3.1bps at 2.237%, 10-Yr is down 2.3bps at 2.7%, and 30-Yr is down 1.3bps at 3.307%.
• UK: The 2-Yr yield is down 0.4bps at 3.964%, 5-Yr is down 0.6bps at 4.133%, 10-Yr is down 0.4bps at 4.736%, and 30-Yr is down 0.8bps at 5.6%.
• Italian BTP spread up 4bps at 87.3bps / French OAT up 5.1bps at 82.4bps