See last night's long post for pretty pictures and good articles. This morning post is a torso and I'll add the missing pieces later.
News
roundup – The Trader
The 6am Cut
London – alphaville
/ FT
Commodity
Summary – Commodities
Trader
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
Danske
Daily – Danske Bank (pdf)
US stocks closed higher – Asian markets are generally showing strong gains. Surprisingly strong Q1 Australian GDP report lifts AUD. Spain's budget minister takes headlines – speculation about precautionary credit lines. Seven German and three Austrian banks are downgraded by Moody's. Focus today is on the ECB - we expect a 25bp cut (only 11 out of 60 analysts surveyed by Bloomberg agree)
US stocks closed higher – Asian markets are generally showing strong gains. Surprisingly strong Q1 Australian GDP report lifts AUD. Spain's budget minister takes headlines – speculation about precautionary credit lines. Seven German and three Austrian banks are downgraded by Moody's. Focus today is on the ECB - we expect a 25bp cut (only 11 out of 60 analysts surveyed by Bloomberg agree)
European markets are likely to open higher Wednesday as finance ministers from the G7 nations agreed to help deal with the debt crises in Spain and Greece. Meanwhile, Draghi's speech following the ECB interest rate decision will be keenly eyed.
An extended UK break presents the opportunity to recap significant newsflow from the Euro-area
EURO CRISIS: GENERAL
Moody's Downgrades Six German Bank Groups, And
Their Subsidiaries, By Up To Three Notches – ZH
Increased
risks to asset quality, limited loss-absorption capacity. Banks with global
operations reviewed on a later date.
France, Italy, Spain Services PMI Show Continued Sharp Decreases;
Eurozone Composite PMI Near 3-Year Low; Germany Services PMI at 6-Month Low – Mish’s
If the ECB is looking for an excuse to cut
rates, it sure has one.
Gaming the Odds of a Greek Euro Exit With and
Without Contagion –
Mish’s
Deutsche’s assessments,
Mish: The true contagion scenario is not
what people think but rather the reverse. Greece exits the eurozone, recovers,
and other countries decide to do the same.
EURO CRISIS: ECB
We have suggested that the market is
under-estimating the risk of action by the ECB.
Only So Much ECB Can Do About Crisis – WSJ
With Greek elections approaching—and its future
in the euro at stake—as well as a critical European Union summit looming at the
end of June, a "shock-and-awe" response from the ECB seems unlikely
just yet.
US QE
The TIPS curve has inverted – Sober Look
However this move in TIPS certainly raises the
risk of near-term deflation, driven by weak demand growth. And deflation
is notoriously difficult to get under control.
Betting on QE3? Not So Fast… – MarketBeat
/ WSJ
In the past, the Fed has been quick to act when
it seems that the risk of deflation is growing. But in this chart it doesn’t
seem like the market is pricing in much of a chance of deflation.
Fed(wire) to the rescue – alphaville
/ FT
Hilsenrath notes that the Fed’s main options
are doing nothing; doing some more signalling; a short extension of Operation
Twist; or outright new bond purchases.
Save Us, Ben Bernanke, You're Our Only Hope – The
Atlantic
How Star Wars tells you everything you need to
know about the miserable U.S. recovery and the
Federal Reserve that has failed to improve it.
OTHER
Treasuries Currently Overbought – The
Short Side of Long
Very nice
multiasset overview.
MF Global and the Risks Looming in the Repo
Market – DealBook
/ NYT
The $6 billion of European bets drained
crippling amounts of cash from MF Global, hastening its crash. But the firm had
no problem putting on these trades just weeks earlier. This suggests that
problems still loom in the repo market, the place where MF Global raised money
to pay for its European trades.