Egan-Jones Downgrades BP From A- To BBB+, Negative Outlook, 4 Notches Below S&P

As Egan-Jones says,the downgrade should be a "big heads up for Money Market Funds." Not to worry, we are confident that two years after the Reserve fund broke the buck, financial regulation has moved far enough to contain any potential fall out from massive redemptions. Right. Right?

Forint Slide Accelerates As Hungarian Default Risk Now 14 Wider To 277bps

Poor, poor Europe. Every room one shines a light in, the cockroaches don't even bother to scurry to safety any more. Yet what is glaringly obvious takes a media-reported soundbite to awake people. So is the case with Hungary today. After opening 7 tighter, Hungarian CDS are now 14 bps wider to 277bps. As the attached chart shows, the Hungarian Forint is now in freefall. Yet if investors are concerned about Hungary, they should take a look at some of its less lucky Eastern European neighbors which, just like Hungary, have been considered to be strong for so long.

Goldman Revises NFP Expectation To +600K From +500K, Entirely Due To Census

Goldman is still off the Zero Hedge estimate of +700k. However, seeing how Goldman has the hot line to the BLS, especially on matters relating to NFP revisions 24 hours prior to actual announcement, we will go Hatzius on this one: "We are raising our estimate for tomorrow's nonfarm payrolls release for May to +600,000 from +500,000 previously. This is composed of a Census contribution of +450,000 (vs. +350,000 in our previous estimate) and a private sector contribution of +150,000 (unchanged). We also expect the unemployment rate to decline from 9.9% to 9.7% and average hourly earnings to rise 0.1% (both unchanged from our previous estimate)." - Goldman Sachs

Euro Decoupling, Inverse Style

Update 2: think tank report making rounds saying SNB cannot keep intervening in CHF.

Update: fresh round of euro weakness due to rumor that the ECB will recommend further unlimited Long-Term Refinancing Operations (liquidity providing) in a major dovish reversal. This is very EUR negative as is just more fuel for the currency debasement game.

Just as the EUR decoupled from risky assets two days ago, with the broader market dropping far more than the EURJPY pair suggested it should, so the opposite is occuring currently. The far too obvious trade, which in this market is apparently the right one, is the buy the EURJPY and sell stocks.

Meet The Latest European Contagion Casualty: Hungary

If you are wondering where the latest bout of Euro weakness is coming from, look no further than long-forgotten Eastern Europe. From Bloomberg: "Hungary’s forint weakened against the
euro, erasing earlier gains after Napi.hu reported deputy
chairman of the ruling Fidesz party, Lajos Kosa, said that the
country has a “slim chance to avoid the Greek situation” and
that the new government’s primary objective is to avoid a
sovereign default." It is rather amazing how long Eastern Europe has managed to squeek through the cracks. Will Hungary be the first rerouting of the PIIGS crisis into this latest European market. This means that another under the radar player, Austria, is about to get whacked big.

Moody's Downgrades BP To Aa2, On Review For Further Downgrade

Moody's, as usual, needs someone to take the lead on any controversial call. As expected, nothing insightful contained in the report. "While recognising that BP is the largest operator and producer in the Gulf of Mexico, Moody's will also seek to ascertain how the spill may affect (1) BP's long-term business prospects in the US, particularly in the Gulf of Mexico; (2) future drilling and producing costs in the US and other deepwater provinces around the world; and (3) therefore also BP's business profile and future financial performance."

Morning Gold Fix: June 3, 2010

Today's activity will continue to be influenced by the "risk-on" crowd. Sell bonds, buy stocks, buy oil, sell gold, rinse repeat. But we see less and less people selling what they buy in the gold market. Sell side activity is more dominated by hot money liquidation than ever before. PIMCO's El Arian said their fund cut its gold holdings in half, citing the liquidation deflation drivers at play. That will not help today's activity either. We can only hope he is right. Our order underneath remains unfilled.