European stock market, economy and companies update (July 01, 2015)

***Notes/Observations***
- Japan Quarterly Tankan Survey boosted by strong CAPEX
- Greece technically "in arrears" with the IMF after missing the Jun 30th payment
- Eurogroup convenes on Greece most recent proposal and reignites hopes for a compromise; Greece PM Tsipras said to be prepared to accept all bailout conditions
- All eyes are on the ECB today and its decision on ELA; emergency assistance to Greece has so far been frozen, but not cut off


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities**
Indices [Stoxx50 +2.5%, FTSE 100 +1.3% at 6,608, DAX +2.1% at 11,184, CAC-40 +2.5% at 4,909, IBEX-35 +2% at 10,988, FTSE MIB +2.3% at 22,991, SMI +1.1% at 8,878, Athens Stock Exchange closed, S&P 500 Futures +1.1% at 2,076]

- Market Focal Points/Key Themes: Equity markets open higher as German Chancellor Merkel said to raise the possibility of debt relief for Greece; Markets later extend gains amid press speculation that Tsipras is said to be prepared to accept most of the creditors' conditions; Upcoming ECB ELA decision in focus; Greece situation starting to have some impact on capital markets (German fashion firm CBR postpones IPO); Euro Zone PMI in line, periphery lags; Upcoming US ADP data

By Sector
- Utilities [Endesa ELE.ES -2% (ex-dividend)]
- Healthcare [Evotec EVT.DE -5% (data presentation) ]
- Industrials [Airbus AIR.FR +2% (order in China); Manz Automation M5Z.DE -3.5% (profit warning) ]
- Energy [Tullow Oil TLW.UK +2% (raised production forecast)]
- Consumer Staples [CHR Hansen CHR.DK +5% (Q3 profits above ests)]
- Consumer Discretionary [Speedy Hire SDY.UK -30% (profit warning)]
- Financials [Serco SRP.UK +11% (upbeat trading update)]
- Technology [Monitise MONI.UK +4% (partnership agreement)]
- Stoxx50 Sectors [Technology +1%, Consumer Cyclical +0.9%, Telecom +0.7%, Energy +0.7%, Industrials +0.6%, Financials +0.3%, Basic Materials +0.2%, Consumer Non-Cyclical +0.2%; Utilities -0.2%]

**Speakers**
- Eurogroup teleconference call on Greece pushed back by 6 hours; To take place at 11:30 ET (1530 GMT)
- Greece PM Tsipras said to be prepared to accept all bailout conditions. Would accept all his bailout creditors' conditions that were on the table this weekend with only a handful of minor changes
- Germany Chancellor Merkel said to raise possibility of Greece debt relief and was ready to back steps to help Greece's debt sustainability. Germany ready to back shift of Greek liabilities to ECB into ESM rescue fund
- Chancellor Osborne reiterated to do what was needed to protect UK economy; vital that uncertainty related to Greece is resolved
- S&P: Euro zone economy was at a 'tipping point'; now saw 1.9% GDP growth in 2016
- China Premier Li Keqiang: Moderate Chinese growth has not hurt employment

**Currencies***
- EUR/USD was initially under pressure in early Europe and briefly tested under the 1.11 level as the Greek Referendum was looming this coming weekend. Eurogroup convened later today on Greece's most recent proposal and this reignited hopes for a compromise. Risk appetite found some momentum after reports circulated that Greece PM Tsipras said prepared to accept all bailout conditions. EUR/USD around 1.1150 just ahead of the NY morning.
- Dealers had their eyes on the ECB and its decision on ELA today for the Greek banking sector. The emergency assistance to Greece had so far been frozen but not cut off. The expiration of the Jun 30th deadline could change that. It was now increasingly difficult to still argue that Greek banks were solvent and keep the lifeline for Greek banks and ultimately the Greek government in place
- The GBP was softer after UK PMI Manufacturig data was weaker than expected. USD/GBP was off 0.2% to test 1.5660

**Fixed Income:
- German Bund futures : trade down 40 ticks 151.60 at the lows of the day as rumours circulate that Greek PM Tspiras will accept bailout proposals. To the downside initial support lies at 151.45 then 151.02 and 150.51 as further levels of support.To the upside focus remains on Monday's high at 152.96, with a break above this targeting trend line resistance at 153.51, a break of this would target 50% retracement level at 154.41/57.
- Wednesday ECB liquidity report showed Tuesdays's excess liquidity rose to €396.3B a rise of €10.5B from €385.8B due to a corresponding decrease in AFs. This comes after a €22.7B increase on Monday and represent the highest level since March 2013. As a result EONIA nears record low.
- UK Gilt futures: trade at 115.28 down 44 ticks just off the lows at 115.19, as selling pressure increased on the back of bailout proposal talks. Near term support lies at 115.03 a break of this would see 114.52 as the next target. To the upside near term resistance is just above the highs at 115.99 which is the 50% retracement of the May/June fall, with resistance above at 116.36.

**Political/In the Papers:
-(GR) Greece does not meet the 18:00ET deadline for $1.7B IMF loan payment and requests extension; Officially "in arrears"; IMF will consider Greek request in due course
- (GR) Greece PM's office: requesting a two-year bailout program via the European Stability Mechanism (ESM) to cover financing needs; also asks for parallel restructuring of debt - financial press; Reportedly the new Greek proposal asks for €29.1B in funding from ESM for 3rd bailout package - press
- (GR) Greece intends to send a fresh letter with new proposals; will be discussed by Eurogroup on Wed
- (GR) According to Prorata opinion poll related to Greece referendum, yes vote 33%, no vote 54%, undecided at 13%. In terms of the responses taken before the bank closures, yes 30%, no 57%, and undecided 13%
- Following the bank closures, yes 37%, no 46%, undecided 17%

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 1.75%
- (RO) Romania Jun International Reserves: No est v $33.8B prior
- (US) Jun Wards Total Vehicle Sales: No est v 17.71M prior; Domestic Vehicle Sales: No est v 13.95M prior
- (RU) Russia Sovereign Wealth Fund Balances: Reserve Fund: No est v $76.3B prior; Wellbeing Fund: No est v $75.9B prior
- (BR) Brazil May CNI Capacity Utilization: No est v 80.6% prior
- (ZA) South Africa Jun Naamsa Vehicle Sales Y/Y: No est v -3.2% prior
- (IN) India to sell INR150B indicated in 3-month and 6-month in Bills
- (DE) German CDU member: Parliament to discuss Greece
- (RO) Romania Central Bank Gov Interest Rate Announcement
- 05:30 (DE) German Fin Min Schaeuble to present 2016 draft budget in Berlin
- 05:30 (DE) Germany to sell €5.0B in new 0.25% Oct 2020 BOBL
- 06:15 (EU) EU Juncker on EU budget proposals
- 06:30 (EU) EU's Dombrovskis press conference in Brussels
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell Bonds
- 07:00 (US) MBA Mortgage Applications w/e Jun 26th: No est v +1.6% prior
- 07:30 (US) Jun Challenger Job Cuts: No est v 41.0K prior; Y/Y: No est v -22.5% prior
- 07:30 (SE) Sweden's Fin Min Andersson at Economic Seminar at Almedalen
- 07:30 (US) Preview: June 2015 Vehicle Sales numbers expected throughout the day from major auto makers
- 08:00 (CZ) Czech Jun Budget Balance (CZK): No est v -22.1B prior
- 08:15 (US) Jun ADP Employment Change: 218Ke v +201K prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (US) Intuit reports Jun small business employment
- 09:00 (BR) Brazil Jun PMI Manufacturing: No est v 45.9 prior
- 09:30 (NZ) Fonterra Global Dairy Trade auction
- 09:45 (US) Jun Final Markit Manufacturing PMI: 63.4e v 53.4 prelim
- 10:00 (US) May Construction Spending M/M: 0.4%e v 2.2% prior
- 10:00 (US) Jun ISM Manufacturing: 53.1e v 52.8 prior; Prices Paid: 51.0e v 49.5 prior
- 10:00 (MX) Mexico May Total Remittances: No est v $2.0B prior
- 10:00 (US) Revisions to Construction Spending data
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 10:30 (MX) Mexico Jun PMI Manufacturing: No est v 53.3 prior
- 11:30 (BR) Brazil Weekly Currency Flows
- 11:30 (GR) Eurogroup teleconference to discuss state of play on Greece
- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v 10.8% prior
- 12:00 (IT) Italy Jun Budget Balance: No est v -€4.3B prior
- 13:00 (MX) Mexico Jun IMEF Survey Manufacturing Index: 52.0e v 52.4 prior; Non-Manufacturing Index: 51.5e v 51.1 prior
- 14:00 (BR) Brazil Jun Trade Balance: $4.0Be v $2.8B prior; Total Exports: No est v $16.8B prior; Total Imports: No est v $14.0B prior
- 19:00 (KR) South Korea May Current Account Balance: No est v $8.1B prior; Balance of Goods (BoP): No est v $12.6B prior
- 21:30 (AU) Australia May Trade Balance: No est v -3.9B prior
- 23:35 (JP) Japan to sell 3-Month Bills
- 23:45 (JP) Japan to sell 10-Year JGB Bonds


**Economic data***
- (ID) Indonesia Jun CPI M/M: 0.5% v 0.7%e; Y/Y: 7.3% v 7.4%e; CPI Core Y/Y: 5.0% v 5.1%e
- (TH) Thailand Jun CPI M/M: 0.1% v 0.1%e; Y/Y: -1.1% v -1.0%e; CPI Core Y/Y: 0.9% v 1.0%e
- (IE) Ireland Jun Manufacturing PMI: 54.6 v 57.1 prior (25th month of expansion but lowest since Feb 2014)
- (IN) India Jun PMI Manufacturing: 51.3 v 52.6 prior (20th month of expansion)
- (JP) Jun Vehicle Sales Y/Y: 5.4% v 1.4% prior (3rd straight rise)
- (RU) Russia Jun PMI Manufacturing (beat): 48.7 v 48.0e (7th month of contraction)
- (SE) Sweden Jun PMI Manufacturing (miss) : 52.8 v 55.2e (22nd month of expansion)
- (NL) Netherlands Jun Manufacturing PMI: 56.2 v 55.5 prior (24th month of expansion)
- (NO) Norway Jun PMI Manufacturing (miss): 44.0 v 48.0e (2nd month of contraction)
- (PL) Poland Jun PMI Manufacturing (miss): 54.3 v 52.4e (9th month of expansion)
- (TR) Turkey Jun Manufacturing PMI (miss): 49.0 v 50.0e (moves back into contraction)
- (HU) Hungary Jun Manufacturing PMI: 55.1 v 55.2 prior (23rd month of expansion)
- (UK) Citi/YouGov May poll: 12-month inflation expectations: 1.4% v 1.0% prior
- (ES) Spain Jun Manufacturing PMI (miss): 54.5 v55.5e (19th month of expansion)
- (CZ) Czech Republic Jun PMI Manufacturing: 56.9 v 55.4e (25th month of expansion and highest since May 2014)
- (CH) Swiss Jun PMI Manufacturing (beat): 50.0 v 49.9e (first non-contraction in six months)
- (IT) Italy Jun Manufacturing PMI (miss): 54.1 v 54.3e (5th month of expansion)
- (FR) France Jun Final Manufacturing PMI (beat): 50.7 v 50.5e (confirms its 1st expansion since April 2014)
- (DE) Germany Jun Final Manufacturing PMI: 51.9 v 51.9e (confirms 7th straight month of expansion)
- (EU) Euro Zone Jun Final Manufacturing PMI: 52.5 v 52.5e (confirms 24th straight month of growth and highest level since Apr 2014)
- (GR) Greece Jun Manufacturing PMI: 46.9 v 48.0 prior (9th month of contraction)
- (UK) Jun PMI Manufacturing: 51.4 v 52.5e (28th month of expansion but lowest since Apr 2013)
- (DK) Denmark Jun PMI Manufacturing Survey: 54.0 v 52.5 prior
- (ZA) South Africa Jun BER Manufacturing PMI: 51.4 v 50.2e

Fixed Income Issuance:
- (EU) ECB allotted $155M in 7-day USD Liquidity at fixed 0.63% vs. $115M prior
- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 6-month Bills; Avg Yield: -0.3888% v -0.3837% prior; Bid-to-cover: 2.51x v 1.31x prior

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