Spanish 10-Year Yields Edging Towards EMU Record Levels

(ID) Indonesia Central left Reference Rate unchanged at 5.75%; as expected

(EU) ECB: €2.0B borrowed in overnight loan facility vs. €1.9B prior; €787.4B parked in deposit facility vs. €788.2B prior

(FR) France Q1 Final nonfarm payrolls Q/Q: 0.1% v 0.1%e

(IN) India Apr Industrial Production Y/Y: +0.1% v +1.7%e

(HU) Hungary May Consumer Prices M/M: -0.2% v +0.2%e; Y/Y: 5.3% v 5.8%e

(SE) Sweden May CPI Headline Rate M/M: -0.1% v -0.1%e; Y/Y: 1.0% v 1.0%e; CPI Level: 315.23 v 315.09e

(SE) Sweden May CPI Underlying Rate M/M: 0.0% v 0.0%e; Y/Y: 0.9% v 0.9%e

(UK) Apr Industrial Production M/M: 0.0% v +0.1%e; Y/Y: -1.0% v -1.0%e

(UK) Apr Manufacturing Production M/M: -0.7% v -0.1%e; Y/Y: -0.3% v +0.4%e

(PT) Portugal May Consumer Price Index M/M: -0.4% v +0.3% prior; Y/Y: 2.7% v 3.0% prior

(PT) Portugal May CPI EU Harmonized Index M/M: -0.3% v 0.0%e; Y/Y: 2.7% v 3.0%e

(IS) Israel May Trade Balance: -$1.7Bv -$1.7B prior

(PT) Portugal Apr Construction Works Index: 56.7 v 63.2 prior

Fixed Income
(NL) Netherlands Debt Agency (DSTA) sold €1.65B vs. €1.5-2.5B indicated range in 2033 DSL Bonds; Avg Yield 2.342% v 2.736% prior

(AT) Austria Debt Agency (AFFA)sold total €1.1B vs. €1.1B indicated in 2022 and 2062 RAGB bonds

Sold €600M in 3.4% Nov 2022 RAGBs Avg Yield 2.360% v 2.634% prior; Bid-to-cover: 2.50x v 2.99x prior

Sold €400M in 3.8% Jan 2062 Bonds; Avg Yield 3.021% v 3.837% prior; Bid-to-cover: 2.08x

Retains €100M

(GR) Greece Debt Agency (PDMA) sold €1.625B vs. €1.25B indicated in 26-week Bills; Avg Yield 4.73% v 4.69% prior; Bid-to-cover: 2.15x v 2.60x prior

(EU) ECB allotted €131.7B in 7-Day Main Refinancing Tender at fixed 1.0%

(EU) ECB allotted €18.9B in 1-Month Tender at fixed 1.0%

(HU) Hungary Debt Agency (AKK) soldHUF55B vs. HUF45B indicated in 3-Month Bills; Avg Yield 7.17% v 7.18% prior; Bid-to-cover: 2.06x v 1.33x prior

(BE) Belgium Debt Agency sold €3.06B vs. €3.5B indicated in 3-month and 12-month Bills

Sold €1.405B vs. €1.75B indicated in 3-month Bills; Avg yield 0.196% v 0.213% prior; Bid-to-cover: 3.26x v 2.27x prior

Sold €1.655B in 12-month Bills; Avg yield 0.561% v 0.627% prior; Bid-to-cover: 2.28x v 2.36x prior

(UK) DMO sold £4.75B in 1% 2017 Gilts; Avg Yield 0.927% v 1.147% prior; Bid-to-cover: 1.28x v 1.37x prior; Tail 1.2bps vs. 0.8bps prior

EFSF to sell 25-year bond; Guidance seen +125-130bps over mid-swaps

Notes/Observations
Spanish 10-year yield nearing EMU record levels.

IMF: JPY currency moderately overvalued.

Crude hits 8 month lows ahead of Thursday OPEC meeting.

Equities
FTSE 100 +0.40% at 5454, DAX + 0.70% at 6182, CAC-40 +0.50% at 3056, IBEX-35 +0.60% at 6554, FTSE MIB -0.50% at 13,012, S&P 500 Futures +0.50% at 1313

Equity markets opened the session mixed, as Italian and Spanish indices have continued to underperform. Italian banks have lagged their European peers for the second straight session, as some believe Italy is now under the microscope, following the move by Spain to seek aid for its banking sector. The selling in Italian banks has tracked the rise in Italy's 10-yr bond yield (hit highest level since late January). Amid concerns about the links between banks and sovereigns, data from the ECB (released on June 8th) showed that Italian banks increased their sovereign debt holdings by €4B in April after increasing holdings by a record €23.7B in March. In other sectors, European resource names have traded mixed, while energy names are lower (tracking decline in oil prices). As of the time of writing, markets have moved off of their worst levels, as the Italian/German 10-yr yield spread has reversed some of the widening seen earlier during the session.

In the UK, shares of the LSE [LSE.UK] are trading flat as the company name a new CFO. French spirits company, Remy Cointreau [RCO.FR] has gained ~0.50%, after disclosing full year earnings and a special dividend. In other French movers, Lafarge has gained ~1% (issued 2012-15 targets), while Lagardere [MMB.FR] is slightly lower (cut 2012 ad sales forecast). TomTom [TOM2.NL] has gained more than 13%, after disclosing a licensing agreement with Apple.