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EUROPE
EU OPINION
Significant opposition
in key countries to an ever closer EU– PEW
Favorable Opinion of EU
Plunges Everywhere, Especially France – Mike
Shedlock
EUROPEAN
CENTRAL BANK
These Are The Bonds The
ECB Is Now Buying – ZH
The ECB must change
course – Deutsche Bank
Why the ECB’s Impact On
Corporate Bonds Has Been Smaller Than It Seems – WSJ
OTHER
Our global scenario remains
largely intact. Developed markets will continue to perform decently despite
headwinds including the temporary tightening of financial conditions earlier
this year. Our forecast revisions are marginal, including a lower EUR/USD
forecast reflecting a somewhat more aggressive rate hiking pace from the
Federal Reserve.
We have changed our
calls for the ECB, the Fed and the BoE. For the ECB we postpone the expected
next easing package to Q4 this year, while we move forward the next Fed rate
hike to September and see two hikes this year, up from previously one hike.
While our baseline is still based on no Brexit, we postpone the first BoE rate
hike to Q1 2017. We do not expect German long yields to slide into negative
territory, but it will be a close call for the 10-year yield.
The key driver of EM FX
performance has changed from commodity prices to the USD.
REGULARS
China imports beat, inflation likely
just below 3%, yields lower despite higher oil * USD broadly weaker as oil
rises above USD 51/bbl * Bund yield near all-time lows * Firming unit labour
costs fail to lift summer Fed hike chance
With the US dollar broadly weaker
gold is continuing its rally while crude oil is successfully defending the psychologically
important $50/barrel level bolstered by dollar weakness and expectations of
inventory declines.
Euro wrap-up –
Daiwa
Currencies Broadly Stable, but
Greenback is Vulnerable
Is China playing silly buggers
again?
More economic
improvements emerge in the Eurozone with GDP revised upwards and German output
beating forecasts. But Brexit fears are mounting and volatility spiked as the
opposing sides run neck and neck.
ECJ rules illegal
migrants cannot be imprisoned for merely crossing borders within Schengen area
* EU Commission proposes €62bn investment fund to boost migration cooperation
with Middle East and African countries * Austria’s far-right party files
lawsuit disputing presidential election result * Eleven member states complain
about German and French protectionism * New Pew poll: Majority of Europeans
want UK to stay and support EU reform
Draghi dominates — EU
pay to stay deal — Clinton’s cracked ceiling
Futures Levitate To Session Highs As
ECB Enters The Bond Market; Crude Hits $51
Friday saw a dramatic
repricing of the Fed outlook after a disastrous employment report. The follow
on action has been largely lacking in the bigger currencies as the market
nervously awaits the FOMC next week but more so the Brexit vote the week after
next.
Flight to bonds may make
sense in the runup to the EU referendum vote in the UK but if there is a Stay
vote a massive unwinding could turn ugly after June 23.
FINNISH
Rumien
lukujen kavalkadi (osa n) * Kiinan vienti laski odotuksia enemmän toukokuussa *
Japanin ensimmäisen neljänneksen BKT-lukuja korjattiin ylöspäin * Norjan
alueraportti povaa kevyttä kasvua toiselle neljännekselle