AUS bonds have fallen away from overstretched targets, but have they topped out? US 10yrs still look trapped in a 2.45-2.65% range so yields have some general upside risks given the data flow this week.
AUS 3yrs hit the top of the range in the mid-50s and have quickly fallen towards support at 9727/30 which should hold on the first attempt near those levels. At this stage I'd suggest a consolidation between 9727-9750. Frustrated shorts who have been stopped out and will want to re-sell towards 9745.
The 10yrs were very overbought and look vulnerable to some more losses if they close below 9653. However given the strength of the uptrend and no apparent top pattern, they may want to bounce off here first...maybe prices need to distribute up at these levels for a while.
In yield terms, just a reminder of the significance of the resistance levels which we failed to clear (10yrs).
The curve has a target at 68/70bp(possibly lower) which I think we will see over time but as always the curve will bounce when US yields rise.
US yields firmly trapped between 2.45%-2.65% unfortunately.