First Impressions

In case you missed it:

Swap Meet: Eris Exchange’s Neal Brady Sees Capital Efficiency Driving Growth of Standardized Swap Contracts
JohnLothianNews.com

Basel III and other capital rules are coming into into force, making efficient use of capital a global priority. As Eris Exchange’s swap futures contracts continue to set new volume and open interest records, and as ICE begins listing interest rate and credit derivatives based on the Eris methodology, Eris CEO Neal Brady sat down with John Lothian News editor-at-large Doug Ashburn to discuss the emergence of swap futures as an important tool in the new financial order.
Watch the video »

Quote of the Day

“The game of chicken needs to end, and so does the blame game. There is no time for any games. It is reality with real possible consequences, first and foremost for the Greek people.”

Donald Tusk, the president of the European Council, in a video statement released today, from the story, “E.C.B. Agrees to Extend Lifeline to Athens”

Lead Stories

E.C.B. Agrees to Extend Lifeline to Athens
Ames Kanter and Niki Kitsantonis – NY Times
Extending its lifeline to Greek banks, the European Central Bank on Friday increased its emergency funding of the country’s financial system after efforts failed on Thursday to broker a deal on Greece’s flailing bailout.
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If You Understand Syriza, Then Greece’s Situation Makes a Lot More Sense
Theophilos Argitis – Bloomberg
In Brussels and Berlin, Greek Prime Minister Alexis Tsipras is an isolated radical unwilling to strike the deal needed to keep his country in the euro.
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There is a bondage twist to complex corporate bond markets
John Dizard – Financial Times
As any well-informed financial markets person can tell you, the move to electronic trading and execution of corporate bonds is just on the horizon. It has been just on the horizon since I first wrote about it back in 1999, and it will stay there until a lot of people such as corporate treasurers, lawyers and other fee-seeking intermediaries are forced into big changes in the way they do business.
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Eurozone Summit Called After Ministers Fail to Reach Bailout Deal
Viktoria Dendrinou and Gabriele Steinhauser – WSJ
Eurozone leaders will try to clinch a deal on Greece’s flailing bailout at a hastily called crisis summit Monday, after finance ministers failed again to bridge the gap between Athens and its lenders.
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Don’t Blame Junk-Bond Buyers for Confusion with Messy Fed Talk
Lisa Abramowicz – Bloomberg
The hint that Federal Reserve stimulus will last just a little longer is enough for investors to go back into risky debt.
Even though investors know the punch bowl will soon be taken away, when U.S. central bankers signaled Wednesday that they won’t raise interest rates as quickly as they previously thought, traders piled into high-yield and emerging-market bonds.
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The Greek people voted against austerity – why is the EU ignoring this?
John Redwood – The Guardian
I am not a natural Syriza voter, but the words and deeds of the EU towards Greece are enough to provoke me to sympathise with the Greek people and their government over austerity.
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It’s a bond market exodus
Akin Oyedele – Business Insider
Bond markets are panicking again.
In a note on Friday, Bank of America Merrill Lynch strategists wrote that this week’s outflows in fixed income — that is, the bond markets — were the biggest since the so-called taper tantrum of 2013.
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The World Is Piling Into Canadian Debt at Fastest Pace on Record
Ari Altstedter and Erik Hertzberg – Bloomberg
The world’s appetite for Canadian government bonds this year is the heartiest ever as the country wins back its status as a haven for global debt investors.
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Goldman, Deutsche Bank Said to Compete for $4.8 Billion of Loans
Neil Callanan, Joe Brennan and Donal Griffin – Bloomberg
Goldman Sachs Group Inc. and Deutsche Bank AG are competing to buy Irish real estate loans with a face value of 4.2 billion euros ($4.8 billion) from Lloyds Banking Group Plc, according to people with knowledge of the matter.
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Central Banks

Greece’s Ruling Party Goes to War With Its Own Central Bank
Matthew Campbell and Marcus Bensasson – Bloomberg
The Greek government sees a lot of enemies in its campaign to reach an eleventh-hour deal on the country’s finances. Including its own central bank.
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What Will Happen at Next Fed Meeting? Look to the Labor Market
John Mason – TheStreet
When it comes to setting policy, it’s now clear that the Federal Reserve is focused on the labor market.
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The Most Powerful Person at the Federal Reserve You’ve Never Heard Of
Alan Katz and Ian Katz – Bloomberg
He played a key role in the controversial bailout of American International Group Inc. He is central to how Dodd-Frank is put into practice. Most everything of significance at the Federal Reserve Board goes across his desk.
And you have probably never heard of him.
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The Federal Reserve is saving the US billions by keeping interest rates low
Corey Stern – Business Insider
Janet Yellen is taking her time with the inevitable rate hike, and taxpayers may need to thank her for it.
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The Chart That Explains the Fed’s Thinking Behind the Next Rate Rise
Matthew Boesler and Steve Matthews – Bloomberg
Chair Janet Yellen has found an unusual pacifier for financial markets anxious for clues about the Federal Reserve’s intentions: a chart with 68 blue dots.
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Fed telling market, ‘Free beer tomorrow’: Economist
Tom DiChristopher – CNBC
The Federal Reserve is suggesting it could still hike interest rates in September, but it may just be trying to manage market risk in doing so, Barclays chief U.S. economist Michael Gapen said Friday.
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Bank of Japan to Provide Price, Growth Information More Often
Tatsuo Ito and Takashi Nakamichi – WSJ
The Bank of Japan said Friday it would provide more information, more often on the price and growth views of its policy-setting members to help improve public understanding of its efforts to tackle deflation.
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A Fresh Catalyst to Power Japanese Stocks
Jason Trennert – Barron’s
For more than two years, we’ve been of the opinion that Japanese equities offered good opportunities for investors looking for tactical overweights.
The original premise of the investment was simply that the Bank of Japan would be forced, in an era global financial repression, to step up its already considerable efforts to ease monetary policy. Despite the fact that the Nikkei has doubled in the past two-and-a-half years, we can think of no more non-consensus view in the investment business today than the idea that Abenomics might actually work.
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Labor market continues to improve: SF Fed President Williams
Press Release – Federal Reserve Bank of San Francisco
The labor market has shown “continued, solid improvement,” said John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco. “Not only has there been strong job growth, but the data show most of those new jobs are full-time and higher paying.”
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Let Traditional State-Run Banks Create Online Units, Says China Central Bank Researcher
PYMNTS
Upstart financial institutions have been using technology to encroach on areas typically the province of China’s state-run banks, according to a senior central bank researcher. And the country’s regulators should set up rules allowing those traditional firms to create online finance units to battle that competition.
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The Skinny on Central Banks – RBA, BoE, FED, SNB and BoJ
ActionForex
This mix of overt and subtle withdrawal of market support is a key macro driver of recent increased volatility. Aside from Euro-Greek fiasco this week, there has been a handful of Central Bank rate announcements, growth projections, press conferences and minutes for the investor to digest.
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Currencies

Euro volatility deals another blow to carry trades
Lisa Twaronite – Reuters
The financial crisis in Greece has taken away the euro’s appeal as a cheap global borrowing currency, leaving investors with barely any viable and deep markets to finance investments.
The Japanese yen was historically a popular funding currency for carry trades, in which investors borrow in cheaper markets to invest in higher-yielding assets, but the yen’s recent fickle behaviour has made it less attractive. Expectations of higher U.S. yields also make the dollar a poor funding candidate.
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Navigating China’s Foreign Exchange Currency Controls
Elizabeth Leclaire – China Briefing
For foreign invested enterprises (FIEs) looking to enter the Chinese market, a thorough understanding of China’s currency controls is crucial. Unlike most developed economies, China does not allow for unrestricted cross border currency transfers, or foreign currency conversion into RMB. Though China’s State Administration of Foreign Exchange (SAFE) has recently expanded companies’ ability to convert and transfer currency, one needs to keep in mind that reforms in China are often on trial basis, and may be reversed if the results are not to the government’s liking.
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SBI launches internet-based foreign exchange platform
Odisha Sun Times
Banking major State Bank of India (SBI) on Friday launched internet-based foreign exchange transactions platform.
According to the public sector undertaking (PSU) bank, the “SBI eforex” enables customers to book their foreign exchange transactions online.
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Indexes & Index Products

ISE ETF Ventures Partner Product Crosses $1 Billion in AUM
International Securities Exchange, LLC
ISE ETF Ventures today announced that its partner firm PureFunds® has surpassed $1 billion in assets under management for its ETF that tracks the ISE Cyber Security IndexTM (index ticker: HXR). This milestone brings the total assets under management for products tied to ISE ETF Ventures to approximately $3.2 billion.
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S&P Dow Jones Indices Market Attributes: Risk & Volatility June 2015
S&P Dow Jones Indices
Ssignificant majority of our volatility measures are up since our last report. Four weeks ago the VIX reached its lowest level for 2015, closing at 12.11. It closed last night at 14.50. The VIX is not particularly high at present (it remains below its 200-day average), but it is trending up.
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New bond index to track S&P 500 names
Reuters
A new bond index is set to be launched in early July that hopes to make a better comparison between equity and fixed-income returns, and encourage investment products designed around it.
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Top performing health stocks face boot after Russell rebalance
Reuters
The Russell 2000 index of small company stocks will lose some heavy hitters from the healthcare sector when FTSE Russell rebalances its indexes at the end of the month, depriving the index of companies that provided much of its growth this year.
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Gold

Heavyweight enviro group targets world’s largest gold project
Frik Els – Mining.com
During the final days of 2014 Canada’s minister of the environment gave the green light to Seabridge Gold’s KSM project in northern British Columbia, the world’s largest undeveloped gold-copper project by reserves.
The joint harmonized federal and provincial environmental assessment process took nearly seven-years and KSM was only the second metal mine in five years to receive approval by Canada and BC.
On Wednesday, Earthworks, a non-profit environmental activist group, issued a scathing report on the KSM project, neatly timed to coincide with KSM’s annual general meeting scheduled for next week.
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India proposes gold-linked bonds to lower bullion imports
Rajendra Jadhav and A. Ananthalakshmi – Reuters
India is planning to issue sovereign bonds linked to the bullion price in an effort to divert some of the estimated 300 tonnes of annual demand for gold bars and coins, and reduce bullion imports that can push up the trade deficit.
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Inflation, deflation and the big gold call
MarketWatch
A major theme among many of the commenters to my most recent columns regarding gold is centered around the inflation/deflation argument.
There are two camps of investors which have diametrically opposed views on why one should own gold. One camp believes that gold is an excellent hedge against inflation, while the other camp believes that gold is a hedge against “down markets,” and deflation.
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Miscellaneous

Time for Momentum ETFs?
Zacks
With the Fed keeping the monetary policy still accommodative and hinting at a slower rate hike trail once the step is actually taken, a risk-on trade sentiment has permeated the marketplace lately. The Fed has once again insisted that this vital move will be economic data-reliant and found the U.S. growth momentum as moderate.
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