1st Jun - EU Open: Risk-off Ahead of W/E

Here are the morning briefings and select article links. The Chinese data continues to underperform, so at least we can discount the rumors that the hermit kingdom will save Europe. More probable would be that the ESM saves China. US Payrolls coming up today, but the European crisis and the looming weekend with the possibility of surprise announcements are more important now than macro data. What surprises could there be during the weekend? Some relatively hard announcement could come out on how the eurocrats will save Spain this time, so the range of possible surprises is more on the positive side. Nevertheless, my gut feeling is that markets will go risk-off towards the day’s close.

For my own recent commentary, see how Spain looks easier, how to play announcement games, and when Spain requests the bailout. If you happen to speak Finnish, check my recent article on Spain.

IMF: Top borrowers 1. Greece SDR 18.941 bln 2. Portugal SDR 15.946 bln 3. Ireland SDR 13.836 bln 4. Romania SDR SDR 10.569 bln (Alea)

 

News roundup – Between The Hedges

News roundup – The Trader

Emerging London Headlines – beyondbrics / FT

The 6am Cut London – alphaville / FT

Press digests by Reuters: FT, WSJ, NYT

Commodity Summary – Commodities Trader

TV: Bloomberg, CNBC, BBC

Debt crisis: live – The Telegraph

The Euro Crisis Blog – WSJ

Tracking Europe’s Debt Crisis – NYT

FX Options Analytics – Saxo Bank

European 10yr Yields and Spreads – MTS indices

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Danske Daily – Danske Bank (pdf)

Sentiment continues to deteriorate in Euroland and US equity markets decline as a response to weaker-than-expected US data and the escalation of the euro crisis. Asian equity markets follow this trend. The Chinese PMI grew less than expected, which added to negative sentiment in the Asian equity markets. The euro remains under pressure against major currencies.

Market Preview: US non-farm payrolls eyed – Saxo Bank

European markets are likely to open mostly higher Friday. Markets are keeping a close eye on the US non-farm payrolls data due later toady. Meanwhile, data showed that China's manufacturing activity grew at a slower pace in May.

Morning Briefing: Crisis, what crisis? – BNY Mellon

Today we look at some of the more interesting numbers to have emerged from the Euro-area of late.

EURO CRISIS

Breakaway or breakup? – voxeu.org

There was a time when Greek exit from the Eurozone seemed implausible – now the prospect is so openly discussed that it even has its own word: Grexit. But amid the media frenzy, we should remind ourselves that single-country breakaway is not the same as a Eurozone breakup. This column discusses the steps to ensure that the former does not imply the latter. It urges leaders to take them quickly.

Hyperbolic Selloff Coming? IMF Discusses Spanish Contingency Plans; Madrid Denies Plans; Hispabonos Dropped From Cabinet Discussion – Mish’s

this mess has gotten bigger every step of the way because central banks ignored moral hazard. Indeed, central banks are by their very existence the epitome of moral hazard.

Urban Myths: Greece, Spain Depositors Moving Cash to Germany – Alea

Europe’s banks: The fear factor – The Economist

Preventing a big European bank run

Killing the euro-patient? – The Economist

The doctors think the medicine will work, if the euro does not die first

A contrarian moment – The Economist

Share prices in Europe may have priced in the bad news

The Danish Dilemma: What the Euro Crisis has Wrought – Marc to Market

The central bank has a single mandate:  maintain the peg.  It has two tools to do so, interest rates and intervention.  Both are being deployed currently.  As the krone rises against the euro, the central bank has cut interest rates both last week and this week.  It has also intervened. 

Spain’s banking system: Teetering – The Economist

Spain has avoided facing up to its banking problems. Now it has no choice

Spanish woes: Hard pounding – The Economist

Recession, bank crises and fiscal woes all feed on each other

 

The Greek election: Democracy in action – The Economist

The outcome is still highly uncertain—as is Greece’s future in the euro

PAYROLLS

May Employment Preview – A Dash of Insight

The least important jobs report of all time – The Reformed Broker

CHINA

China’s FX reserves: the coming peak – beyondbrics / FT
 Nomura has called the top: $3.68tn at the end of 2014, up from a mere $150bn at the start of 2000. China’s reserves will then start to decline, albeit gradually, in 2015.

PMI’s deteriorate

China’s May PMIs look weak from either angle – alphaville / FT

China PMI Plunges Most In 28 Months, Reverts To HSBC's Reality – ZH
Asia today: Manufacturing PMIs echo weak sentiment elsewhere – Saxo Bank

China’s May manufacturing PMI misses estimate – ASA

HSBC/Markit China’s manufacturing PMI falls further in May – ASA
China PMI: action stations – beyondbrics / FT
 

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