WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: GBP was firmer across the board and UK Gilts came under heavy selling pressure following comments by BoE Governor Mark Carney at the fourth annual ECB Forum on Central Banking in Portugal that were perceived by market participants as reflecting a change towards a rather hawkish tone. Meanwhile, with the majority of market participants sharing the view that the Fed is no longer the only G10 Central Bank on a tightening mode, USD came under further selling pressure with the DXY index marking a fresh year-to-date low. EUR/USD extended recent gains hitting a session peak of 1.1435, the highest in more than a year. German Bunds underperformed US Treasuries with the 10-yr yield spread narrowing to the lowest since mid-November 2016.
GREECE: During a meeting with the Greek PM Alexis Tsipras in Athens, the ESM Managing Director urged the Greek government to strengthen the prospects of growth now that the painful measures are behind. Mr. Tsipras replied that the goal is to regain the confidence of the markets and finish the programme in mid-2018 so that no further ESM loans will be needed. The Budget Committee of the German Parliament approved yesterday the disbursement of the next ESM loan tranche (€8.5 billion) to Greece. According to data released yesterday by the Bank of Greece, in May 2017 on a monthly basis credit to the private sector contracted by €904 million while private sector deposits increased by €421 million.
SOUTH EASTERN EUROPE
ROMANIA: The parliament is expected to endorse the new government cabinet later today.
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