29th Jun - EU Open: Limited Right Steps

Initial reaction to the limited risk-sharing and dropping of ESM seniority positive. Some commentators (FT included) remain skeptical, though. I will write more about this this weekend.

News roundup – Between The Hedges

News roundup – The Trader

The 6am Cut London – alphaville / FT

Emerging Markets Headlines – beyondbrics / FT

Press digests by Reuters: FT, WSJ, NYT

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

Asia today: EUR surges on EU summit headlines – Saxo Bank

EUR put on a huge spurt higher midway through today’s Asian session as headlines emerged from EU’s Van Rompuy that the Euro-zone had reaffirmed its commitment to use its bailout funds (EFSF and ESM) flexibly and efficiently.

Market Preview: German Retail Sales eyed – Saxo Bank

European markets are likely to open higher Friday following a positive news flow from the EU Summit. Investors await German retail sales data to determine the strength of domestic demand as well as Chicago manufacturing PMI from the US.

Danske Daily – Danske Bank (pdf)

Rompuy announced that EU has agreed to drop preferred creditor status on Spanish bank rescue loans and to allow rescue funds to capitalize banks directly. Monti refuses to sign growth package until Germany  agrees to  support short-term measures. Risk sentiment has improved and EUR has strengthened after the Rompuy news.

Morning Briefing: First thoughts – BNY Mellon

The results of the latest EU summit looks mixed.

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EURO CRISIS

The Futility of European Elections – John Mauldin / The Big Picture

This couple of days old piece from Stratfor’s Friedman gives a very nice background on what the European countries want.

Yet Another European Council! Rescuing the Eurozone? – Re-Define

At the eve of what is now being unofficially billed as the summit to save the Euro, things are not looking good at all. To put it mildly, no one is expecting miracles from this summit. It would be enough if they can avoid this being a disaster.

EFSF/ESM bond buying in primary market not much better – economist meg

Too small, subordination, conditionality

On Banking Unions – Concepts, their Status, Proposals & Examples – Place du Luxembourg

Summarizes and links the topic very nicely.

European Banks Are Facing More Pain In Spain – WSJ

Spanish-owned banks aren't the only ones under pressure to fortify themselves against Spain's crumbling economy. Foreign banks with big Spanish operations also find themselves in a tough position—and with few options.

Eurozone Retail Sales Drop 8th Month; Italy, France are Down; Germany Retail Sales Up, Outlook Down – Mish’s

EURO CRISIS: SUMMIT

Full EU Summit Statement – ZH

“We task the Eurogroup to implement these decisions by 9 July 2012.”

Thoughts on the Eurozone “Breakthrough” – PragCap

A step in the right direction, but the core issues of unworkable euro and solvency crisis not addressed yet.

Juncker 'Hoped For More' As Italy And Spain (Oh, And Ireland Now) Get (To Share Same-Size) 'Band-Aid' – ZH
Dropped seniority and overseeing of ESM (unratified) and EFSF rescue funds (which will not be boosted in size) to fund not just Italy and Spain but Ireland too...conditioned on agreeing to EU banking oversight

Word of the Day: Sovereignty – Marc to Market

First, many understood Germany's Schaueble's comments about being about to accept some mutualization of euro zone debt and would support short-term measures to deal with the financing problems effecting some governments (Spain and Italy), to be a shift in policy.  It was not… The second surprise was the willingness of Spain and Italy to cut their nose to spite their face, as it were.  They say they will not support a 120-130 bln euro growth measures if there do not get support for their bond markets.

Germany Blinks After All-Night Fight; Italy and Spain Still Not Happy – Mish’s

If this is all the summit produces (other then the expected fluff to agree to agree to do something five years from now), expect whatever gains  (if any) that come from this maneuver to be fleeting.

Spain, seniority, and survivor bias – alphaville / FT
we know this status was equally able to accommodate protection for official lenders from a pari passu writedown in Greece. To an extent, eurozone leaders are now the boy who cried pari passu. Implicit or deferred seniority could still co-exist with this early-morning renunciation for Spain.