Market Up-Date

– Trading in
Europe and US markets has been choppy this morning in the absence of any major
macro data. Chinese markets are closed and analysts continue to digest the
mixed May data out of Beijing, while the S&P upgrade of the United States
is sending US yields higher. As of writing the DJIA is flat, the S&P500
is up 0.12% and the Nasdaq is up 0.20%.

– S&P upgraded its credit outlook for the US to stable from negative and
said the chances of a ratings downgrade is now “less than one in
three” as better tax collection and economic performance cut debt levels.
Recall that S&P downgraded the US rating to AA+ with a negative outlook in
2011 in the toxic political environment surrounding the debt ceiling
negotiations. USD/JPY continues to head higher in the 99 handle, well off of
last week’s lows, while EUR/USD is well contained in a narrow range in the
1.3200 handle.

– The China May economic data out over the weekend was somewhat disappointing.
The trade numbers were way below expectations, although analysts caution that
the shortfall is mostly due to a correction of inflated exports to Hong Kong
from the last several quarters. Moreover, the tepid inflation readings may give
the PBOC some additional flexibility on rates.