- The 3 week long protest in Athens turned violent today. Two PASOK MPs said on Tuesday they would not vote for the new austerity measures, reducing the government’s majority to four. Papandreou announced that he will form a new government and have it ratified in a vote of confidence in parliament on Thursday.
- US Core CPI rose to 1.5% YoY in May vs 1.4% exp and 1.3% prev. Rent and OER both contributed 0.1%.
- Empire Manufacturing dropped to -7.79 in June vs 12 exp and 11.8 prev.
- NAHB Housing Market Index dropped to 13 in June vs 16 exp and prev.
- Moody’s put Credit Agricole, BNP Paribas, and Soc Gen on review for possible downgrade after reviewing their exposure to Greek debt. Moody’s said that CA and BNP are unlikely to lead to downgrades more than one notch, while SocGen could be downgraded by 2 notches.
- UK Claimant Count Rate was unchanged at 4.6% in May as exp. Jobless Claims, however, rose to 19.6k vs 6.5k exp and 12.4k prev.
- South Korea UE dropped to 3.3% in May vs 3.7% exp and 3.6% prev
- Australia Westpac Consumer Confidence declined to 101.2 in June vs 103.9 prev
- Looks like Greece will dominate headlines until the parliament votes on the new austerity measures, which needs to happen before the IMF meeting on July 8th. Depending on how the vote goes, things can bounce or deteriorate quickly. In the interim, this suggests continued downside for risk assets, and German yields.
Looking through recent issues, however, risk assets are likely not so far away from a tradable short term low. Several surveys, including the AAII and the BAML positioning surveys, suggest that risk aversion is now high enough to sustain a decent bounce in US equities. 2yr Treasury yields are just 6bps above all time lows. What’s missing is some sort of catalyst.