- The European indices are currently trading in negative territory in the session, but are off of their worst level following comments that former Fed Chairman Alan Greenspan made about China.

- European government bonds are currently trading in positive territory in the session, gaining upside from a lower than expected reading on the German IFO survey for the month of May. In the UK gilts are currently trading higher as well. The UK DMO sold £2.5B in 5.00% 2018 gilts with an average yield of 5.165%, and a bid-to-cover of 2.15, which was above the neutral call of 1.95, and below the previous bid-to-cover of 2.22.

- As expected the final first-quarter readings on German GDP were in line with the preliminary readings at 0.5% q/q, 3.6% y/y, and 3.3% y/y on an unadjusted basis. First-quarter private consumption fell below estimates of –0.5% for a reading of –1.4%, while imports exceeded estimates of 1.7% for a reading of 3.7%.

- The French business confidence indicator for the month of May came in at 109, below expectations of 111, while the production outlook exceeded estimates with a reading of 15, and own-company production fell below estimates with a reading of 10. April’s reading on the business confidence indicator, which, recall, was a multi-year high, was revised up to 112 from 111.

- The Swiss employment level for the first-quarter rose to 1.8% y/y overnight, reaching its highest level since the first-quarter of 2001.

- Italian business confidence declined by more than expected in May to 96.2 from 98.2 in April.

- The Swiss ZEW expectations survey for the month of May came in flat at 0, below expectations of 1.5.

- The German IFO business climate, which was expected at 108.8, came in at 108.6 for the month of May. The Current assessment came in at 112.5, below estimates of 113.5, and the expectations came in at 104.8, above estimates of 104.5.

- Following the release of the IFO survey, the IFO’s Flaig said that the high index level shows that firms hope for an improvement in private consumption. Flaig said that the Euro-level is high, but does not does not burden companies at the moment, and said that the negative effects of the VAT hike are pretty much over.

- The Royal Bank of Scotland raised its EBC rate outlook to include two more rate hikes in 2007, for rates of 4.25%

- In a report released by the OECD overnight, the OECD said that they see the Federal reserve holding until 2008, and then cutting rates, cutting its 2007 US growth forecast to 2.1% from 2.4%. The OECD forecasted that the Bank of Japan would hold rates until the middle of 2008, and then raise rates by 25 basis points. The OECD raised its Japanese growth forecast to 2.4% in 2007, from the previous forecast of 2.0%. The OECD said that its sees room for the ECB to raise interest rates twice more in 2007, raising its 2007 Euro-Area growth forecast to 2.7% from 2.2%.