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Wednesday, June 6

6th Jun - EU Open: ECB Wait

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 – 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

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 DailyDanske 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)

Market Preview: ECB interest rate decision in focus Saxo Bank

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.

Morning BriefingBNY Mellon
An extended UK break presents the opportunity to recap significant newsflow from the Euro-area

Moody's Downgrades Six German Bank Groups, And Their Subsidiaries, By Up To Three NotchesZH
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 LowMish’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 ContagionMish’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.

The State of Confusion and the ECBMarc to Market
We have suggested that the market is under-estimating the risk of action by the ECB.

Only So Much ECB Can Do About CrisisWSJ
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.

The TIPS curve has invertedSober 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 rescuealphaville / 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 HopeThe 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.

Treasuries Currently OverboughtThe Short Side of Long
Very nice multiasset overview.

MF Global and the Risks Looming in the Repo MarketDealBook / 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.

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