AUSSIE BONDS: ACGB May-34 Auction Results

Oil prices fell moderately on Friday to be down on the week and the month driven by expectations of increased supply and worries about global demand in a world of increased protectionism. They recovered from their intraday lows but were pressured by the stronger US dollar (BBDXY USD index +0.3%) driven by increased geopolitical uncertainty following the tense meeting between the US and Ukrainian presidents.  

• WTI fell 0.6% to finish below $70/bbl but has started today slightly higher at $70.18. It made an intraday low of $69.14. The benchmark ended February down 2.8%. Initial support is at $68.36, 26 February low, while resistance is at $71.34, 50-day EMA.
• Brent was 0.7% lower at $73.08/bbl after falling to $72.32 and was down 2.5% last month. It remained above initial support at $71.50, 26 February low, but the outlook remains bearish with the bear trigger at $72.96 breached. Initial resistance is at $74.21, 50-day EMA.
• The EIA estimates that US tariffs and sanctions risk around 80% of oil imports. Last year, the US imported 4.76mbd from Canada, Venezuela and Mexico. 10% tariffs on energy from Canada and Mexico are scheduled from March 4 and Chevron’s licence to export from Venezuela has been rescinded.
• The prospect of higher tariffs and their negative impact on growth has driven hedge funds to reduce their net-long positions in WTI to their lowest since 2010. The short-only stances were their highest in over a year, according to CFTC data reported by Bloomberg.
• There had been growing market expectations that peace in Ukraine would ease sanctions on Russia allowing it to increase exports. While the argument between the White House and President Zelensky makes this less likely, the meeting between the latter and the EU may have moved the situation closer to a temporary truce.
• Talks are scheduled on Tuesday in Baghdad between Iraqi natural resources officials and oil producers in Kurdistan to discuss the resumption of flows from the region after a two-year dispute. If successful, it is unclear how Iraq will continue to meet its OPEC quota and not overproduce.

• US Equity futures are edging higher this morning, tracking late gains made on Friday. Nasdaq is leading the early gains, up 0.30%, while the S&P 500 futures are +0.20%
• Crypto has surged over the weekend following Trump announcing on Truth Social that his January executive order directed the Presidential Working Group to establish a Crypto Strategic Reserve including XRP, Solana, Cardano, Bitcoin, and Ethereum, driving significant price increases across major cryptos. Bitcoin is up over 10% over the week.
• The initial order lacked specific token mentions, disappointing some Bitcoin advocates, but Trump’s subsequent posts clarified Bitcoin and Ethereum’s central roles, boosting market sentiment.

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6 
• RES 1: 142.73/144.48 - High Dec 9 / High Nov 11  
• PRICE: 139.66 @ 15:52 GMT Feb 28
• SUP 1: 138.71 - Low Feb 19
• SUP 2: 138.62 - 2.0% Lower Bollinger Band
• SUP 3: 138.00 - 1.0% 10-dma envelope

JGBs extended the recent bounce Friday, firming further off recent lows as global equity markets underperformed. The show through 139.99 resistance shows the move could have legs - opening early December highs should the pace be maintained. 144.48 is the medium-term target for bulls.