AUSSIE 10-YEAR TECHS: (H5) Resistance Remains Intact

TYH5 is 108-15+, -0-02+ from NY closing levels. 

• US tsys finished the Monday session with a bear-steepener. US yields were flat to 4bps higher across benchmarks.
• Early market swings were tied to a Washington Post article reporting that the Trump administration was "exploring plans" to apply tariffs to every country “but only cover critical imports.” The report suggests that Trump’s initial tariff plan may track relatively closely with the Biden administration’s targeted tariffs.
• Both rates and equities surged higher on the article - until Trump denied the watered-down approach - with Treasuries reversing course and extending lows by midmorning.
• Record corporate debt issuance for a single session climbed over $50B, rate lock hedging added additional pressure to rates.
• Tuesday’s US data calendar includes JOLTS, ISM Services and Tsy 10Y Re-Open.

USD/CNH saw lows of 7.3132 on Monday, as the Washington Post reported that the incoming Trump administration may water down its tariff plans. We rebounded from these levels, back above 7.3500, as Trump stated the report was fake news. In early Tuesday trade, USD/CNH tracks near 7.3470. CNH gained close to 0.20% for Monday's session. 

• Onshore spot finished up near 7.3280, with dips in this pair also supported. USD/CNY still finished slightly higher for Monday's session, despite the broader USD pull back (BBDXY index off over 0.60%). BBG notes state banks were reportedly USD sellers close to the 7.3300 level.   
• The CNY CFETS basket tracker edged down nearly 0.20% to 101.89, still close to recent cycle highs.
• For USD/CNH, intra-session lows from Monday were close to the 20-day EMA support point (near 7.3110). Recent highs just under 7.3700 remain intact.
• Cross asset headwinds persist for CNH. US-CH yield differentials remain elevated and continue to suggest dips in the pair will remain supported, given uncertainty over Fed cuts in 2025 and the prospect of further PBoC easing. Relative equity trends have also shifted in favor of offshore markets in the past week.
• Still, the PBoC sent a clearer and stronger signal on stabilising the yuan in its Q4 monetary policy meeting, emphasising “strengthening market management” whilst deleting “enhancing exchange rate flexibility” which appeared in its Q3 meeting, PBOC-run newspaper Financial News reported. Hence USD/CNY fixings may remain sub 7.2000 until we have firmer details on Trump's tariff plans.
• The local data calendar has Dec FX reserves on tap later today, but greater focus will rest on Thursday's inflation data. 

After rising strongly last week, oil prices were moderately lower on Monday driven by technical selling but held onto most of the gains. The relative strength index was flashing overbought after crude rose for five consecutive sessions. The USD index fell 0.6%.

• WTI is down 0.7% to $73.42/bbl following a high of $74.99, above initial resistance at $74.39, and then a low of $73.20. Key short-term resistance is at $76.41, while initial support is $71.79, January 2 low.
• Brent fell 0.4% to $76.17/bbl after rising to $77.50, above resistance at $76.89, and then falling to $75.94. If the uptrend resumes, then attention will refocus on key resistance at $79.50. Initial support is at $74.72.
• The US is planning more sanctions on tankers carrying Russian oil. The targeting of its shadow fleet has resulted in increased demand for Middle Eastern crude and subsequent pickup in prices. Saudi increased prices for Asian customers following Oman and Dubai.
• The latest CFTC data shows that hedge fund longs on WTI rose 41% over the last three weeks, while shorts fell 33% resulting in the largest net long position since August, according to Bloomberg.
• President Biden announced a ban on new offshore oil and gas projects covering around 625mn acres of coast. The area includes the Atlantic, Pacific and eastern Gulf of Mexico. President-elect Trump has said he will “unban” these areas but to do so will require an act of Congress.
• In Canada, Alberta’s government has said that it will guarantee barrels of crude to encourage new pipelines to be built to achieve its goal of doubling its oil and gas output.