The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

The Euro is rallying to a 2 mo high vs the US$ after Spain sold 15 yr paper at a solid b/c of 2.57 with a yield of 5.12% vs a b/c of 1.79 and yield of 4.43% in May. Yields across their curve are lower with the 2 yr in particular falling to the lowest since May. The 10 yr spread to the German Bund is at a 3 week low and the IBEX is rallying to a 2 mo high. Greek stocks are also at 2 mo highs after Greek bank Piraeus (one of the 91 banks being tested) offered to buy government stakes in 2 Greek banks as the consolidation of their banking system has hopefully begun. Greek 5 yr CDS are quoted below 800 vs 1000 2 1/2 weeks ago. ECB’s Mersch said “we should not get addicted” to bond purchases and implied they may be ending soon as they only bought 1b euro worth last week. The Shanghai index closed at a 1 week low after Q2 GDP rose 10.3%, still solid but .2% below estimates and Retail Sales and IP were below forecasts. FDI though was up a big 39.6% y/o/y and CPI and PPI were lower than expected.