Greece finally gets serious, presents workable proposals

•     Greece finally gets serious, presents workable proposals

–    New proposals go a long way towards meeting creditors’ demands, but not 100%

–    Still much work to be done – Lagarde says proposals “still lack specificity”

–    Greece still insists creditors must reduce the country’s debt burden – that may be taken up after an agreement is reached

–    Agreement must pass Greek parliament before being submitted to Bundestag, but some members of SYRIZA coalition still resisting concessions

–    NEW DEADLINE:  Eurogroup & EU leaders’ meeting on Thursday

•     EUR-denominated assets rally, but EUR weakens

–    Eurostoxx index up 4%, Italian bonds rally sharply

–    But EUR is being used as a funding currency, so it weakens in risk-on environment

–    Also investors are hedging their currency exposure = selling as they buy stocks

–    USD rallies vs most currencies as existing home sales beat expectations

•     Today is PMI day

–    China official manufacturing PMI rises to 49.6 from 49.2 = beats expectations but remains below 50. Economy is stabilizing but not yet growing. AUD, NZD weaken

–    Eurozone: Manufacturing PMIs expected to remain unchanged or increase a bit, while service-sector PMIs expected to decline = not likely to be enough to boost EUR

–    US: Market PMI expected to accelerate = USD-positive. Durable goods orders for May expected to fall, but ex-transportation expected to rise at same pace as April = neutral. New home sales for May expected to rise = could be USD-positive