Greece Makes €200M Repayment to IMF

Good Morning,

- Dollar trade under pressure after sharp widening in the U.S. trade deficit data yesterday, suggested the economy may have shrunk in the first quarter. Dollar index fell as far as 94.70, retreating from a one-week high of 96.10.

- Spanish Services PMI: Fastest rise in activity since November 2006. April data signaled a further acceleration in the pace of growth in the Spanish service sector, with activity, new business and employment all increasing at rates not seen since prior to the economic crisis. Moreover, panelists generally foresee growth continuing over the coming year. There was little sign of inflationary pressure building as input costs rose at a slower pace and charges fell slightly again . The headline seasonally adjusted Business Activity Index rose for the second month running to 60.3 in April from 57.3 in March.

- Greece Makes €200M Repayment to IMF - GR Official

- Selloff in government bonds from Germany to Australia, Long-term U.S. Treasury yields rose on Tuesday to their highest level this year.

- Global bond markets have lost about $340 billion since the start of last week as investors ponder the end of a six-year rally that sent yields to record lows. Traders returning from Europe’s May Day holidays sent yields surging across the continent as tensions between Greece and its creditors worsened, adding to the anxiety.

- Greece blamed its creditors for the failure to end the impasse over its fiscal crisis as government bonds slumped and the European Central Bank weighs how much more liquidity to offer its financial system. No deal will be possible until the European Commission and the International Monetary Fund reduce the number of red lines they’re demanding, a government official said on Tuesday. The comments clouded the outlook for bailout talks, which some officials had said were making progress, and accelerated a selloff in the country’s stocks and bonds.

- Deutsche Bank on EUR Squeeze: EUR/GBP (to the topside) is the top scoring currency, data from Deutsche Bank technical scorecard showed this week. "It is least stretched according to risk reversals and least volatile as per implied volatility. However, it is extremely stretched from RSI perspective and has high realized volatility," DB adds. "GBP/USD may be a better way to express the euro bounce. The currency pair is among the least stretched as per RSI and has moderately smooth price action from realized volatility perspective," DB advises.

- Fed's Kocherlakota : Repeats that raising rates in 2015 is inappropriate. Says personal consumption expenditures inflation is running well below 2%, and "it will continue to do so for several years. Based on this outlook, raising the fed funds rate in 2015 would be inappropriate, because such an action would serve to further delay the return of inflation to target". Says that while the labor market improved rapidly in 2014 ... "one good year certainly does not make up for the several preceding disappointing ones".

- HSBC China Composite PMI data indicated an expansion of Chinese business activity in April, as has been the case in each month throughout the past year. However, the pace of activity growth weakened slightly to a three-month low, with the HSBC Composite Output Index posting at 51.3, down from 51.8 in March. The slower expansion of total business activity was largely driven by a stagnation of manufacturing output in April, following three months of growth. Meanwhile, service sector activity increased solidly over the month.

- Oil prices rose on Wednesday to hold near 2015 highs, continuing a month-long rally that was supported by a weaker dollar and a disruption to crude exports in Libya. Oil bulls have pushed prices higher this week, after a rally of between 20 percent and 25 percent in April, despite a continued build in U.S. crude stockpiles and indications that the OPEC cartel will keep production at current high levels at a meeting next month.

- Watch today: EU retail sales, US mortgages, US ADP jobs, Fed’s Yellen is scheduled to speak.

Have a nice Day!