SNAPSHOT:
-Euro steady; Treasury futures little changed; stock futures edge lower; ICE July Brent down 32c at $98.53, Nymex July light, sweet crude up 6c at $84.04; spot gold at $1,618.90, up 60 cents
-Watch for: ISM non-manufacturing report, Fed speakers
Top News: Private-Sector Output Falls in Euro Zone; Lagarde Says ECB Has Room to Cut Rates; Spain Says Needs More Urgent EU Help
MARKETS OUTLOOK: FOREX:
The euro was steady in London trade despite poor data which showed that retail sales fell 1% on the month in April, well below economists’ expectations of a 0.2% drop. EUR/USD traded just off the day’s lows at 1.2422, while EUR/JPY was at 97.31, having traded as weak as 97.05.
Meantime, Citigroup said it suspects that investors hoping for some coordinated response to recent market strains at the G-7 conference call will be disappointed. It said that such expectations are premature at the very least and views the call as more of a preparatory discussion ahead of the G-20 summit later this month.
It added that “beyond liquidity provision in response to any flare-up in money market strains, it is not clear what new policy measures the G-7 would be able to mobilize so quickly.” While there may be additional easing by the world’s major central banks, policy makers appear several steps away from action and fiscal authorities lack the flexibility to respond, it added.
BONDS:
Treasury futures trimmed gains to trade little changed in London, having taken cues from German Bunds. At 0422 ET, the September Treasury futures contract was at 134-04.
With Treasury yields in uncharted territory, traders may be hedging more of their positions or reducing exposure to a move up or down in yields, according to RBS Securities analysts. Just last week, several investors said they saw 1.5% as the low in 10-year yields, only to see that broken through after the payrolls report.
“Whether a sailor or a pilot, uncharted waters/skies often dictate a slow-go approach among those tasked to ply such waters or fly in such skies,” Bill O’Donnell, head of Treasury strategy at RBS, wrote in a note. “Many experienced pilots and sailors would never venture into the unknown, preferring instead to leave such ventures to others.”
EQUITIES:
U.S. stocks are expected to start slightly lower Tuesday, as market participants await details of a phone call between G-7 finance ministers and central bankers. The emphasiss of the call is likely to be on Spain. However, traders are warning not to expect too much from the teleconference call, with whispers of some sort of co-ordinated financial action wide of the mark.
In Europe, the Euro Stoxx 50 was down 0.1% at 2076.29, after downbeat Services PMI data for the euro zone knocked sentiment a touch. In addition, retail sales fell 1% on the month in April, well below economists’ expectations. However, bank stocks remained up as investors hoped that a conference call between G-7 finance ministers will provide some sort of solution for the euro zone’s sovereign debt crisis, particularly when it comes to the banks. A trader said, though, it was unlikely that there’d be coordinated intervention efforts by G-7 central banks.
COMMODITIES:
Brent crude futures fell over 2% Monday to below $96 a barrel, trading at levels last seen in January 2011 as the commodity tracked other markets lower on renewed worries over the global economy and oil demand. Brent touched an intraday low of $95.84 per barrel, while Nymex crude reached a fresh eight month low of $81.32 per barrel. “We’re seeing weakness across all the markets,” said one crude oil broker.
Gold held most of Friday’s gains in Asian trading Monday, despite coming under some pressure, and it is expected to trade in a relatively tight range ahead of announcements from several central banks this week. “The upward momentum has faded,” but gold is likely to keep trading above $1,600/oz, Wing Fung Financial Group analyst Mark To said. Trading was expected to be lighter-than-usual in Europe because of a market holiday in London.
=======TODAY'S CALENDAR=======
ET PERIOD
0945 US May ISM-NY Report on Business
1000 US May Employment Trends Index
1000 US Apr Manufacturers' Shipments,
Inventories & Orders
==============================
TOP STORIES OF THE DAY:
Oil futures were little changed in London after recovering slightly from eight-month lows hit Monday amid concerns over the state of the global economy. Analysts said bargain hunters may help to support prices as Brent hovers below $100/bbl for the first time since October last year. But the main driving force this week will likely be the meetings between the G-7 and ECB to discuss the European debt crisis, they added.
Gold was little changed in Asia amid thin trading as cautious investors awaited fresh direction from key policy meetings of central banks and the much-awaited election in Greece. Trading is expected to remain thin through the day as the London market is closed for a public holiday.
“Investors are waiting for fresh news from Europe,” and are unlikely to move aggressively into the market ahead of Greek election June 17, a Hong Kong-based trader said.
=======TODAY'S CALENDAR=======
ET PERIOD
0700 US Dallas Fed Pres Fisher speech
0745 US Jun 2 ICSC-Goldman Sachs Chain
Store Sales Index
0815 CAN May Official International
Reserves
0830 CAN Apr Building permits
0830 US Annual GDP by State
0855 US Jun 2 Johnson Redbook Retail Sales
0900 CAN Bank of Canada interest rate
announcement
1000 US May ISM Non-Manufacturing Report
1100 US May Global Services PMI
1415 US St Louis Fed President
Bullard speech
1630 US Jun 1 API Weekly Statistical Bulletin
1915 US Chicago Fed President Evans
speech
==============================
TOP STORIES OF THE DAY:
Private-Sector Output Falls in Euro Zone
Activity in the euro zone’s services sector continued to decline in May, suggesting the currency area’s economy is likely to contract in the second quarter as its debt crisis intensifies.
Lagarde Says ECB Has Room to Cut Rates
The European Central Bank has room to cut interest rates in an effort to boost growth in Europe, Christine Lagarde, the head of the IMF says in an interview.
Riksbank Urges Spanish Bank Recapitalization
Spain’s banks need to be recapitalized as the southern European nation struggles with a banking crisis, Swedish Riksbank governor Stefan Ingves says.
Spain Says Needs More Urgent EU Help
Spain’s budget minister says the European Union is moving in the right direction in addressing Spain’s problems, but may need to act faster to support the country.
Spain Services Activity Falls Sharply
Spanish services activity falls in May at its fastest rate since November, the latest sign that the country’s economy is souring rapidly as the debt crisis in the euro zone deepens.
Australia Cuts Rates By 25 Bps
RBA cuts interest rates a further 25 basis points in a preemptive move to buttress the country’s economy against growing signs of deterioration in global growth and to spark activity at home.
S&P Says 1-in-3 Chance Greece Exits
S&P says there is at least a 1-in-3 chance Greece will leave euro zone following its national elections later this month, a move that will seriously damage the country’s economy.
China May Need $629B Easing, Says Fitch
Chinese credit growth is slowing at a faster pace, and as much as $628.54 billion, in policy easing may be necessary in China this year, Fitch says.
Blankfein Says Board Topics Are Confidential
Topics discussed at Goldman Sachs board meetings are strictly confidential, the investment bank’s chief executive, Lloyd Blankfein, told jurors at Rajat Gupta’s insider-trading trial.
Shell CEO: Expects Drilling in Alaska’s Beaufort Sea in July if No New Legal Challenge
Royal Dutch Shell PLC (RDSA) hopes to be drilling for oil offshore Alaska next month, Chief Executive Peter Voser said Tuesday.
-By Paul Larkins, Dow Jones Newswires; 4420-7842-9319; paul.larkins@dowjones.com
Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 for the last five years in a row. This email was sent by Eddy Elfenbein through StockTwits with mailing address at 5110 N. 40th Street #108, Phoenix, AZ 85018; Telephone: 
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