Ukraine

The key events on tap for next week.    

As we enter Sunday and what may well be the last possibility to get deal done before the "accidental" Grexit scenario is put in play, we thought our Greek readers would be interested to learn that while Lagarde's "apolitical" IMF is digging in tooth and nail against giving Greece even the smallest amount of breathing room, the equivalent of half an our of a typical daily Fed POMO notional amount, yesterday the same Lagarde said that the IMF "could lend to Ukraine even if Ukraine determines it cannot service its debt."

What’s the connection between the G7 summit in Germany, President Putin’s visit to Italy, the Bilderberg club meeting in Austria, and the TTIP – the US-EU free trade deal – negotiations in Washington?

• Razor-edge U.S. Congress vote to decide fate of Obama Pacific trade pact (Reuters)
• EU Readies for Default as Tsipras Drives Greek Finances to Brink (BBG)
• Greece Can’t Plan a Barbecue, Let Alone a Currency, Nielsen Says (BBG)
• IMF quits Greece talks amid ‘air of unreality’ as deal unravels (FT)
• Greece Counts Cost of One Man's Gamble (BBG)
• Merkel urges Greece and creditors to keep pushing for deal (Reuters)
• Fearful ECB starts countdown on Greek funding lifeline (Reuters)
• Greek stocks suffer further pummelling (FT)

Gazprom has vowed to entirely cut out Ukraine as a transit hub for natural gas exports to Europe. “We will not export gas via Ukraine after 2019. The customers will get gas at (newly) agreed delivery points,” Gazprom’s Deputy CEO Alexander Medvedev said on June 9.

In the last 3 days, Ukraine's short-term bond prices have crashed 9%. Specifically the 2017s are down 3.5 points today alone following Ukraine's (American) finance minister threats yesterday in Washington that it will default on its debt unless creditors (which include both Russia and the US taxpayer) acquiesce to their demands for more aid (more debt). As Bloomberg reports, the country will stop making payments on its debt if talks don’t make progress, Finance Minister Natalie Jaresko told reporters in Washington Wednesday. Bondholders are “deeply concerned” about Jaresko’s stance, a creditor group led by Franklin Templeton said in a statement today.

• Pope urges Putin to make 'sincere, great effort' for Ukraine peace (Reuters)
• Merkel Tells Tsipras It’s Time to Back Talk With Policy Action (BBG)
• 'Greek tragedy' needs happy ending now: EU's Moscovici (Reuters)
• Vulture Funds Circle Greece Targeting Europe’s Best Trading Bet (BBG)
• Germany against third aid program for Greece under any circumstances, says daily (Reuters)
• Biggest OPEC Members Pump Record Oil With Rally in Jeopardy (BBG)
• Greek ruling reversing pension cuts will cost state 1 to 1.5 bln euros (Kathimerini)
• China’s Former Security Chief Zhou Yongkang Sentenced to Life in Prison (WSJ)
• MSCI backs itself into corner on China share inclusion (Reuters)

Greece should get out as fast as it can, all member countries should, especially the poorer ones. There is no benign or even economically viable future for any of them in the Union. A future inside the union is infinitely more frightening than one outside. What is evident by now is that the troika creditors don’t come to the table to negotiate, they come to impose their will. And those countries that carry the most debt are most vulnerable to the threats flung across the table. If you don’t get out, in time Germany will decide what you can eat, what your children learn in school, and how you are to behave. You will no longer live in sovereign nations.

"Ultimately I think to deal with Putin you need to deal from strength - he's a bully and ... you enable bad behavior when you're nuanced with a guy like that."

"Today, Europe is not independent… The US is drawing us [the EU] into a crusade against Russia, which contradicts the interests of Europe,” said the former French Prime Minister Fillon while the chief economist at Bremer Landesbank adds that as a result of US policies "unmeasurable damage lies in an elevated geopolitical risk situation for the people in the EU.”

Just a day after Canadian Prime Minister Harper confirmed his nation's desire for stronger economic ties to Poland, two Russian warships came within 7 miles of the Frigate carrying the Prime Minister across The Baltic Sea. The Frigate's captain said the Russian ships "posed no threat," but the coincidence is unmistakable just hours after Harper slammed Putin (and Russia), demanding further sanctions.

After a Chinese session which following the MSCI failure to include Chinese stocks in its EM index, if only for the time being, was largely a dud with Shanghai stocks actually dropping by 0.1% after a late day selloff, eyes turned to Europe, which once again did not disappoint and where the bond rout continued apace, with the 10Y Bund yield spiking just after the European open, and rising above 1.05%, the widest level since September 19, before recouping some losses and trading just around 1.00% at last check.

As Russia adjusts to Western sanctions stemming from the conflict in Ukraine, Gazprom is now settling all crude sales to China in renminbi. At the intersection of the petrodollar's death and yuan hegemony is: the PetroYuan...