WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Global equity markets traded mixed on Wednesday ahead of a string of key events on Thursday, with Chinese stocks rallying on speculation that China’s A-Shares will be included in MSCI’s indexes on June 20. Risk-off sentiment pushed government bond prices up, with the 10yr UST yield falling to a seven-month low of 2.129% yesterday, before recovering to 2.15% in early European trade on Wednesday. Falling US bond yields weighed further on the US dollar, already pressured by intensified political uncertainty. Against this background, the USD fell to a 1 ½ month low of 109.13 against the safe-haven JPY in European trade at the time of writing. In the UK, market concerns shift towards the outcome of the June 8th general elections on Thursday, with latest polls showing a lead for the Conservatives between 4-11pps over the Labour Party, a significantly lower lead compared to April when PM Theresa May called general elections.
GREECE: With regard to the 2nd programme review, there are still a number of prior actions that need to be fulfilled but the Greek government appears confident that they will have been completed in time for the June 15th Eurogroup. Aside from the completion of the 2nd review and the approval of the release of the next loan tranche, the Greek government expects that the next Eurogroup meeting’s conclusions will be so formulated as to leave a margin for the ECB to include Greece’s eligible debt in its QE programme.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging market assets traded sideways earlier on Wednesday as investor caution prevailed ahead of major events globally due later in the week.
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