As the world counts down to Greece's vote, the ECB hinted another LTRO isn't on the cards just yet.

Not quite carnage but not a great session for risk either – mixed all up. Markets are still very nervous about Europe but there was no major news out last night, a few minor bits and pieces. Firstly, there was another poll in Greece, but this time it showed pro-reform parties in the lead – with 17 days and counting – I can’t wait. June 17 is the day when we find out whether Greece wants to remain part of the EU, or join up with the OAU (Organisation for African Unity).

Looking at Spain, Fitch decided to downgrade eight of that country's autonomous regions – because they can and Spain has been in the press a lot lately. Certainly I’m not of the view that the downgrade was warranted on any metric.

Then the head of the ECB reiterated that they would continue to lend to solvent banks but hinted that another 3-year LTRO wasn’t on the cards yet. The reason? Because the panic wasn’t as bad this time around – seriously. But there are positive implications from his comments. If people can panic enough, if they can just try that little bit harder – then the money will flow freely again. The reason why he was opposed to flooding the market with more crack (just one more hit, man, just one more!) is because there wasn’t a lot the ECB could do about things at the moment. There were two problems the way he saw it – risk aversion and a lack of capital – and its Draghi’s view that the ECB can’t fix either. They can’t force people to borrow or lend. Other than that he lent his support to calls for the permanent bailout fund, the European Stability Mechanism, to directly capitalise banks in need.

That’s the European news flow by and large and as you can see there was nothing earth shattering and the price action reflected that. I should add that there was economic data out and it was good. German retail sales were much stronger than expected, rising 0.6 per cent in April and March’s figures were revised up to 1.6 per cent from 0.8 per cent. Still in Germany, the unemployment rate fell to 6.7 per cent in May (from 6.8 per cent), which compares favourably to the euro-era average of about 9 per cent. The Swiss then had their own little surprise when growth was stronger than forecast in the first quarter – 0.7 per cent after a 0.5 per cent fourth-quarter gain. Not too shabby.

Stocks were then mixed, with the Dax off 0.3 per cent, the CaC up 0.1 per cent and the FTSE up 0.5 per cent. Spanish bond yields fell, quite sharply initially with the 10-year yield hitting a low of 6.43 per cent or a 30 basis points fall in the space of four hours or so. As it is, yields are down 12 basis points in the session, settling at 6.56 per cent from 6.68 per cent. As for the euro, the unit ended about 30 pips lower to 1.2359 on a 90 pips range.

Across the sea, stocks in the US bounced around – with the S&P500 up 0.5 per cent at the high and down 1.1 per cent at the low – but ended weaker at session’s end. The S&P500 and Dow closed down 0.2 per cent (at 1310 and 12393 respectively) while the Nasdaq was off 0.3 per cent (2827). There are of course European concerns, and without any offsetting positive economic data any bid just couldn’t be maintained. It’s not that the data was particularly bad or anything – jobless claims rose certainly, which isn’t good, but only 10,000 to 383,000 (week to May 26). Then the ADP employment report disappointed slightly, jobs rising 130,000 or so, compared to the 150,000 expectation. By sector, telecoms, utilities and financials were the key outperformers, while energy and basic materials weighed heavy, hit by another commodity sell off. Crude for instance was down 1.5 per cent on WTI ($86.53) and Brent was down 1.6 per cent to $101.8. Copper was then 0.7 per cent lower while gold was little changed at $1560.

In the fixed income space, bonds yields around the globe hit new record lows as the relentless rally continued. Yields on bunds and gilts are down about 7 basis points on the 10-year to 1.2 per cent and 1.57 per cent while for treasuries, the 10-year yield is at 1.565 or 5 basis points lower from 1630 AEST yesterday. The 5-year yield is at 0.65 per cent or 4 basis points lower, while the 2-year is at 0.26 per cent. Aussie futures were up 3 and 5 ticks respectively to 97.89 and 97.18 on the 3s and the 10s respectively.

Other than that, the Australian dollar traded on a 90 pips range, ending about 15 pips higher (from 1630 AEST) to 0.9731. Sterling was then 70 pips lower at 1.5406 and the yen is at 78.33.

Bits and pieces otherwise. The second estimate of US GDP showed growth was unrevised at 1.9 per cent although household consumption was stronger at 2.9 per cent compared to 2.7 per cent in the previous estimate. There were some other minor data prints – the Chicago PMI fell to 52.7 from 56.2, the Milwaukee NAPM rose to 57.7 from 52.9 and finally chain store sales rose about 4 per cent year-on-year in May according to the ICSC, confirming recent strength in consumer spending. Elsewhere European CPI was still above target in May at 2.4 per cent from 2.6 per cent previously.

Not much out today, an estimate of China’s PMI at 1230 AEST, India’s trade numbers this afternoon alongside the RBA’s commodity price numbers. Tonight there is a solid flow of US data – payrolls market (looks for 150,000), the ISM index (a modest fall expected) and personal income and spending data.

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