10-yr JGBs were seen down 18 ticks at 143.31 heading into the European session, as participants fled safe-haven assets following the good Japanese GDP data overnight. Last price taken at 0635BST. (RANsquawk)
Japanese GDP (Q1 P) Q/Q 1.0% vs. Exp. 0.9% (Prev. -0.2%, Rev. 0.0%)
Japanese GDP Annualized (Q1 P) Y/Y 4.1% vs. Exp. 3.5% (Prev. -0.7%, Rev. 0.1%)
Japanese Nominal GDP (Q1 P) Q/Q 1.0% vs. Exp. 1.0% (Prev. -0.5%, Rev. -0.3%)
Japanese GDP Deflator (Q1 P) Y/Y -1.2% vs. Exp. -1.5% (Prev. -1.8%, Rev. -1.9%) (Sources)
Following the figures, the Japanese government may revise upwards its assessment of the economy for the first time in 9- months, according to unsourced reports. (Asahi)
Despite early weakness in US T-notes yesterday, support was found at 133.00 and moved higher from this level for the rest of the session, with the largest gain on the back on the FOMC April minutes which proved to be slightly more dovish than the previous. The notable comment being that several of the FOMC said easing may be needed if recovery falters, as opposed to 'couple' as mentioned last month. With no auctions from the treasury or fed outright operations yesterday, the market was mainly driven by sentiment spill-over from Europe and positioning ahead of the FOMC minutes. T-notes settled at 133.14 yesterday, up 2 ticks. Finally, the DJIA finished at 12599.38, down 0.26%; the SPX finished at 1324.83, down 0.44%; and the NDX finished at 2561.56, down 0.74%. T-notes were seen trading down 7+ ticks at 133.06 heading into the European session, pushing lower in overnight trade following the positive GDP data overnight from Japan. Last price taken at 0634BST. (RANsquawk)
The FOMC minutes said that several of the FOMC members felt further easing may be needed if the recovery falters, and about half of the members believed that exceptionally low rates would be appropriate until late 2014. (Sources) Most Fed officials saw roughly balanced inflation risks, and inflation dropping to or below the current target, though one saw upside risks if the current easy policy extended much beyond 2012. About half of the members viewed risks to their GDP forecast as broadly balanced, though nearly all saw significant downside risks, especially from the continuing Euro-area crisis.
Fed's Bullard said the Fed could respond to significant deterioration, however the FOMC is trying to do too much with an easy policy. (Sources)
Foreclosure activity on US homes fell to lowest level in nearly five years in April, according to RealtyTrac. (Sources) Foreclosures were reported to have fallen to 188,780, down 5% from March and 14% from a year previously, the lowest level since July 2007.
The ECB said it continues to support Greek banks, and confirmed that it is moving four unnamed Greek banks to Emergency Liquidity Assistance (ELA) from its main operations. (Sources) The ECB said it expects Greek banks to be recapitalized within days, and recapitalized Greek banks can move back to normal refinancing.
IMF's Lagarde has said the IMF have conducted a technical review of a possible Greek Eurozone exit. Lagarde added that the optimal solution is a new Greek government that will commit to the bailout terms and stay within the Eurozone. (Sources) Elsewhere, the German deputy finance minister has said Greece cannot stay within the Eurozone if they reject their bailout package.
EU's Almunia said the EU lacks a credible and clear growth strategy, and the issue of common Euro-bonds needs to be discussed. (Sources)
A US official said the IMF has the resources if Europe chooses to ask and Greece is not past the point of no return on the Euro-zone. (Sources)
Italy's financial revival has been strong and government forecasts can be met if reforms are fully implemented, but more needs to be done to stimulate growth, according to the IMF. (FT-More) The IMF's European department director said that following the assessment Italy should have the highest primary surplus in the Eurozone next year.
Spanish PM Rajoy has urged the EU to provide more support for the monetary union's more fragile members as borrowing costs for Spain and Italy remain elevated amid speculation of a Greek exit. (WSJ)
The government of Spain are to announce that they will appoint Oliver Wyman and BlackRock to independently value real-estate loans in the nation. The first stage is set to be completed within a month, with the second stage to be completed within three months. (Sources)
UK PM Cameron is to today warn that the Eurozone could unravel in such a way that creates huge risks for everyone unless the 17 members move closer towards a full fiscal and political union. (FT-More)
SNB's Jordan said the minimum Swiss exchange rate is very effective and credible. (Sources)
Australian Consumer Inflation Expectation (May) M/M 3.1% (Prev. 3.3%) (Sources)
New Zealand ANZ Consumer Confidence (May) M/M -0.1% (Prev. 3.4%)
New Zealand ANZ Consumer Confidence Index (May) M/M 113.9 (Prev. 114.0) (Sources)
Iran continues to develop its ballistic missile programme, launches missiles in violation of sanctions according to a UN expert panel. (Sources) The panel noted that sanctions have slowed Iran's procurement of critical nuclear technology and a sanctioned subsidiary of an Iranian shipping line continues to operate vessels.
The US Senate is to ask the chamber to approve a new package of oil and economic sanctions today aimed at further pressuring Iran to abandon its nuclear plans. (Sources)
WTI crude futures were trading up USD 0.70 at USD 93.52, receiving a boost overnight from the better than expected Japanese data. Last price taken at 0634BST. (RANsquawk)
The IEA Chief Economist said oil prices pose a serious risk to the global economic recovery, and the IEA is ready to release strategic stocks if the conditions warrant it. (Sources)
The White House declined to comment on a news report that the US will seek G8 support for a strategic oil release although the Obama Administration affirmed that all options remain on the table for a SPR release. (Sources)
US Senators have urged swift action from regulators to curb excessive speculation in the energy markets, as Dodd-Frank reforms leave oil and gas markets exposed. (WSJ)
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