ECB keeps its ELA funding for Greece banking sector unchanged for 1st time in over 3 months

Notes/Observations

- G7 finance ministers and central bankers begin 3-day meeting in Germany

- BOJ Minutes show continued rift among Board members

- German consumer confidence hits fresh 14-year high

- ECB said to have kept its ELA funding for Greece unchanged at €80.2B (1st time in over 3 months it has not been raised)

Economic data

- (JP) Japan May Small Business Confidence: 48.1 v 48.0e

- (DE) Germany Jun GfK Consumer Confidence (beat): 10.2 v 10.0e (highest since Oct 2001)

- (CH) Swiss Apr UBS Consumption Indicator: 1.25 v 1.34 prior

- (FI) Finland May Consumer Confidence Index: 15.5 v 11.4 prior; Business Confidence: -11 v -10 prior

- (FI) Finland Apr Unemployment Rate: 10.3% v 10.3% prior

- (FI) Finland Apr House Price Index M/M: 0.2% v 1.1% prior; Y/Y: -1.0% v -2.2% prior

- (FR) France May Consumer Confidence (miss): 93 v 95e

- (SE) Sweden May Consumer Confidence (beat): 98.8 v 98.5e; Manufacturing Confidence (beat): 100.5 v 97.2e; Economic Tendency Survey: 101.4 v 100.9e

- (SE) Sweden Apr Trade Balance (SEK): 5.7B v 4.0Be

Fixed Income:

- (EU) EFSF opened its book to sell €2.25B in Nov 2019 bonds; guidance seen at -12bps to mid-swaps

- (IN) India sold total INR150B vs. INR150B indicated in 3-month and 12-month in Bills

- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 1.75% 2021 bond; Avg Yield: 1.23% v 1.05% prior; Bid-to-cover: 3.11x v 4.00x prior

- (EU) ECB allotted $0.0M in 7-day USD Liquidity Tender at fixed 0.62% vs. $0.0M prior

- (IT) Italy Debt Agency (Tesoro) sold €6.0B vs. €6.0B indicated in 6-month Bills; Avg Yield: 0.004% v 0.00% prior; Bid-to-cover: 1.94x v 1.80x prior

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month Bills

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +0.4%, FTSE 100 +0.6% at 6,991, DAX +0.2% at 11,652, CAC-40 +0.6% at 5,110, IBEX-35 +0.6% at 11,302, FTSE MIB +0.7% at 23,500, SMI +0.5% at 9,320, Athens Stock Exchange +0.7%, S&P 500 Futures flat at 2,104]

- Market Focal Points/Key Themes: European equity markets open mostly higher following declines on Tuesday, European core government bond prices open slightly lower; Upcoming German 30-year bond auction and weekly ECB decision on ELA for Greek banks in focus

By Sector

- Consumer Discretionary [De La Rue DLAR.UK -8% (FY sales below ests, cut dividend) ]

- Financials [Generali G.IT +1% (issued 2018 targets)]

- Stoxx50 Sectors [Utilities -0.5%, Consumer Cyclical -0.4%, Financials -0.3%; Telecom +0.6%, Technology +0.3%, Industrials +0.2%, Basic Materials +0.1%, Consumer Non-Cyclical +0.1%, Energy +0.1%]

**Speakers**

- ECB said to have kept its ELA funding for Greece unchanged at €80.2B and also left haircut on Greece collateral unchanged

- German officials said to be optimistic that Greece will make the upcoming €300M IMF payment due on Jun 5th

- Head of German Govt advisors (aka. 'wisemen') Christoph Schmidt: Greece contagion risk has diminished compared to a few years ago

- France Labor Min Rebsamen: 2015 will be better for employment than 2014

- Sweden Central Bank (Riksbank) Risk Survey noted that financial markets were functioning well but did have increasing concerns over monetary policy risks

- South Africa Deputy Gov Groepe: Monetary policy normalization should occur. Saw upside risks to inflation outlook while power outages were contributing to low business confidence. Thus he saw a challenging outlook for monetary policy (high inflation/low growth)

- Japan Cabinet Office (Govt) May Monthly Economic Report maintained its overall assessment that the domestic economy was recovering with improvement in corporate sector

- Japan BOJ Dep Gov Iwata: Best if FX rate reflects economy (fundamentals) and moves in a stable fashion

- Japan Fin Min Aso reiterated view that fx volatility was undesirable. Sudden movements in FX was not desirable

- Japan Economy Min Amari: Reiterates rapid fx moves are undesirable; moderate fx movements important

Currencies

- The USD consolidated some of its recent gains during the European session.

- The EUR/USD regained a foothold above the 1.09 level after falling by approx. 4% over the last week and hitting one-month low on Tuesday.

- The USD/JPY hovered just off its recent 8-year high at 123.32 ahead of a G7 meeting in Germany. Various Japanese politicians and central bankers reiterated standard G7 rhetoric that it was best if FX rate reflected fundamentals and moves in a stable fashion

Political/In the Papers:

- (ES) Spanish Govt is seeking expansion of ECB's mandate; proposes changes to take place in 2017-2019. ECB should prevent macroeconomic divergence among countries as well as price stability

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (DE) G7 Finance Ministers and Central Bank Chiefs begin 3-day meeting in Dresden

- (UK) State Opening of U.K. Parliament

- (EU) ECB allotment in 3-month LTRO Tender at fixed 0.05% vs. €45.8Be

- 05:30 (DE) Germany to sell €2.0B in 2.5% 2046 Bunds

- 05:30 (UK) DMO to sell £700M in 0.125% I/L 2058 Gilts

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.75-1.0B in Apr 2021 OT bond

- 05:30 (SE) Sweden Central Bank (Riksbank) Dep Gov Floden

- 06:00 (IE) Ireland Apr Property Prices M/M: No est v 0.9% prior; Y/Y: No est v 16.8% prior

- 07:00 (US) MBA Mortgage Applications w/e May 22nd: No est v -1.5% prior

- 07:00 (RU) Russia to sell RUB20B in 2019 and 2025 OFZ bonds

- 07:30 (CL) Central Bank's Traders Survey

- 07:45 (US) Chain Store Sales

- 08:15 (US) Baltic Dry Bulk Index

- 08:55 (US) Weekly Redbook Sales

- 09:00 (BE) Belgium May Business Confidence: -5.7e v -6.2 prior

- 09:30 (BR) Brazil Apr Total Outstanding Loans (BRL): 3.076Te v 3.060T prior; Y/Y: No est v 1.2% prior; Personal Loan Default Rate: 5.2%e v 5.2% prior

- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.75%

- 11:30 (US) Treasury to sell 4-Week and 52-Week Bills

- 11:30 (US) Treasury to sell $13B in 2-Year Floating Rate Notes Reopening

- 13:00 (US) Treasury to sell $35B in 5-Year Notes

- 16:30 (US) Weekly API Oil Inventories

- 19:50 (JP) Japan Apr Retail Sales M/M: +1.1%e v -1.8% prior (revised from -1.9%); Retail Trade Y/Y: +5.5%e v -9.7% prior; Large Retailers' Sales: +9.1%e v -13.0% prior

- 22:00 (PH) Philippines Q1 GDP Q/Q: 1.4%e v 2.5% prior; Y/Y: 6.6%e v 6.9% prior

- 23:35 (JP) Japan to sell 3-Month Bills

- 23:45 (JP) Japan to sell 2-Year Bonds

- (BR) Brazil May CNI Consumer Confidence: No est v 99 prior