JGB prices remained firmer heading into the EU session, dealers noted that several pension funds have already asked domestic brokerage houses to buy JGBs across the curve on their behalf. (IFR)
Japanese Official Reserve Assets (USD) (Apr) M/M 1289.5bln (Prev. 1288.7bln)
Japanese Leading Index CI (Mar P) M/M 96.6 vs. Exp. 96.9 (Prev. 96.3, Rev. 96.0) (Sources)
China is considering a delay in its upcoming 5-yearly key party congress by a few months amid an internal debate over the size and make-up over its top decision making body according to sources. (Sources)
T-notes settled in positive territory on Tuesday, as risk-off trade boosted demand for US paper on fears regarding the resolution of the Greek political situation, with talks to form a coalition government bearing little fruit. The 3y note auction was decent, with the yield stopping through the WI for the first time in 3 months and strong demand was seen from domestic and foreign accounts. However, flows in the 10s into the close saw bond futures come off their best levels. At the pit close, t-notes settled at 132.29, up 8+ ticks. Finally, the DJIA finished down 0.59% at 12932.09, the S&P 500 finished down 0.43% at 1363.71 and the Nasdaq 100 finished down 0.36% at 2629.87. T-notes were trading up 2+ ticks at 133.00 as investors seek safety with the on-going political concerns in Greece. Last price taken at 0630BST. (RANsquawk)
Fed's Fisher said 'before you exit you have to stop accommodating' and that he would not advocate for more accommodation despite the job market still being lacklustre. (Sources)
Yesterday's results of USD 32bln 3y note auction had a yield of 0.362% vs. exp. 0.365%, and the WI stopped at 0.365%; B/C 3.65 vs. avg. 3.49 (prev. 3.36); the indirects were 35.7% vs. avg. 36.00% (prev. 40.00%); with allotted at high 66.17%. (Sources)
The Spanish government is to order domestic banks to set aside between EUR 20-40bln of extra bad loan provisions and capital buffers. This would be additional to the already approved rules obliging banks to boost provisions by EUR 50bln, according to sources. (EFE)
The Greek Syriza leader Tspiras has still been unsuccessful in forming a coalition government, but the Greek conservative leader Samaras said he would tolerate a minority government, and does not want the country to have new elections. (Sources)
Economists from the German Ifo Institute have warned that Europe must prepare for a potential Greek exit for the Eurozone. The Ifo have said it would be absolutely appropriate to develop a scenario which allows Greece to exit the Eurozone in the most orderly fashion possible. (Handelsblatt) In related news, Credit Suisse have raised their probability of Greece exiting the Eurozone from 5% to 15%. (Sources)
The IMF said the German economy could reach the growth potential of 1.25% Y/Y in the second half of this year, and there is no need to revise the 2012 or 2013 growth forecasts according to an IMF source. (Sources) The IMF added that Germany can allow higher inflation to help address the Euro-crisis and Germany should back increasing the EIB lending capacity.
EU's Van Rompuy has called upon Greece to move ahead with their planned reform measures and spending cuts. Van Rompuy highlighted the fact that Greece has received a large quantity of borrowed money, but only in return for their savings and reforms. (Sources)
EU's Barroso has challenged EU leaders to approve growth-enhancing measures by their late-June meeting even as he acknowledged that debt-laden governments would have to continue to tighten their belts. (FT-More)
EU's Rehn said the EU will present its analysis of the Italian budget by the end of May and that Italy's goals match that of the fiscal compact, but a delay in the country's labour reforms could hurt the credibility of the reform process. (Sources)
Italian PM Monti called for an 'arrears fix' before the fiscal compact is in force, as well as supply side reforms in the EU. (Sources) The Italian PM added that the French and Greek election results show the need for growth policies, but that the Greek election won't lead to softer EU budget rules. Furthermore, he is convinced common Euro-zone bonds will happen, in the near futures.
The IMF said the SNB's decision to set a floor on its forex rate was appropriate, but may require further monetary expansion.(Sources) The IMF added defending the floor may spur excessive inflation and asset price bubbles, but that the SNB can mitigate such inflation and asset price risks through a careful exit strategy.
WTI crude futures were trading down USD 0.47 at USD 96.54 heading into the EU session, following a large build in the API crude oil inventories overnight. Last price taken at 0630BST. (RANsquawk)
US API Crude Oil Inventories (May 4) W/W 7781K vs. Prev. 2035K
US API Gasoline Inventories (May 4) W/W -4963K vs. Prev. -3898K
US API Distillate Inventory (May 4) W/W -2726K vs. Prev. -4176K
US API Cushing Crude OK Inventory (May 4) W/W 1208K vs. Prev. 1177K. (Sources)
A sophisticated cyber attack on US natural gas pipelines has been underway for several months, according to the Dept. of Homeland Security, raising fresh fears about the vulnerability of the system to hackers. (FT-More)
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