Markets Today: 11 days of 11th hour negotiations

11 days of 11th hour negotiations: It sure feels like it. It’s still Greek news setting the pace for the market.

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11 days of 11th hour negotiations: It sure feels like it.  It’s still Greek news setting the pace for the market.  After some enthusiasm (well hope anyway) that a deal was well on the way, the IMF has, according to press reports, thrown a spanner in the works demanding abolition of early retirement pensions (rather than increased contributions) and a tougher line on VAT rises.  Greek PM Tsipras met with EC President Juncker, IMF’s Lagarde, ECB’s Draghi, and EuroGroup’s Dijsselbloem for an extended session but there’s still no word from Tsipras.  Creditors are still saying there’ll be no talk of debt relief/ restructuring until a reform package is agreed.

Separately, the EuroGroup (Euro FinMins) met but without a result and are meeting again tonight.  Tsipras was also meeting again with JLDD as we write this so the market will be alert to wire news through our day today and with more meetings tonight.  Remaining sticking points apparently remain over the early retirement pensions, VAT changes, bailout extension time (3m/6m?). There’s the EU leaders’ Summit tonight and though Tusk said earlier in the week that this meeting would not be one for technical negotiations, it might well require heads of state intervention to seal a deal that would also have to be passed by the Greek Parliament with the June 30 IMF deadline looming.

There was a bid tone to Treasuries and German bunds, yields on both easing somewhat, though Euro periphery bonds also mostly rallied.  Equities fell in Europe and in the US, European sentiment also not helped by a weaker than expected German Ifo Business Survey after nine months of improvement.  And it was as much in the “current assessment” as in “expectations”.  US Q1 GDP was revised from -0.7% to -0.2%, as expected.

The USD has been only marginally stronger overall, the AUD losing some ground overnight to test below 0.77 for a time, trading just above the figure this morning.  For what it’s worth, yesterday’s second tier China consumer sentiment was mildly positive and spot iron ore is up $1.19 overnight.

Finally, and as a postscript to yesterday, the IMF released its Concluding Statement at the conclusion of its Article IV consultation with Australia, with uncontentious content and policy recommendations.  The Fund recommended monetary policy should be ready to ease further if needed, noted APRA action to address housing risks and recommended that fiscal repair not be front loaded, also wanting more public investment.

Coming up today/tonight

No market sensitive Australian data today. There’s the ABS Job Vacancies report for May, a more comprehensive reading on job availability and prospective employment.  We’ve detected that very recent labour demand releases (ANZ Job Ads, SEEK and yesterday’s skilled vacancies) have softened again, signalling that the pick-up in employment may well slow again.  As some counter, net immigration inflows to March have shown some signs of slowing, pointing to some slight moderation in population growth, lowering the employment growth hurdle rate needed to stabilise the unemployment rate.  In that regard, the Statistician is today publishing its population estimates for the end of December.  This, and the related net immigration data for March, could yet have some bearing in the estimates of population used in the monthly labour force reports.  Population growth had already slowed from 1.8% y/y to September 2013 to 1.5% by September 2014.  NAB’s Consumer Anxiety Survey for Q2, outlining the latest factors affecting anxiety, is also being released today.

If the market does not consumed with Greece, the main focus in the US will be weekly jobless claims and the May personal income, spending and PCE deflators report, that report helping analysts firm up estimates for prospective consumption growth in Q2.  Retail sales for May point to some acceleration in spending, the consensus looking for nominal growth of 0.7% and real growth of 0.5%.  The market will also be very watchful of the deflators, the market looking for steady 0.1%/1.2% annual growth in the core PCE deflator.

Overnight

Greece negotiations hitting potholes: Eurostoxx 600 -0.4%, Dax -0.6%, CAC -0.2%, FTSE +0.1%.  Dow -178 points to 17,966, -1.0%, S&P 500 -1.0%, Nasdaq -0.7%, VIX 13.26 +9.5%.  Mumbai +2.5%, Nikkei 225 -0.7% and ASX 200 -0.3%; ASX SPI futures this morning -0.2%.  US bond yields: 2s at 0.68% (0), 10s at 2.37% (-4).  WTI oil at $60.25 (-1.2%), Brent at $63.54 (-1.4%), Malaysian Tapis (yesterday) $65.88 (+3.0%).  Gold at $1174.40/oz (-0.2%). Base metals: LME copper -0.7%, nickel -0.7%, aluminium -0.5%. Iron ore $62.5/t +1.9% Chinese steel rebar futures -0.2%. Soft commodities spot futures: wheat -0.7%, sugar +2.1%, cotton +0.1%, coffee 4.2%.  Euro Dec 14 CO2 emissions at €7.51/t (-0.1%). The AUD/USD’s range overnight 0.7683-0.7772; indicative range today 0.7670-0.7730; the AUD/USD is 0.7704 now

German Ifo Survey (June) 107.4 (L: 108.5; E: 108.1); US GDP (Q1, final) revised to -0.2% from -0.7% (E: -0.2%)

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