After declining to an overnight session low of 1.2260 following very disappointing Japanese GDP news [8], which saw another Q/Q drop in nominal terms and missed every economist expectation, the market leading indicator - the highly leveraged EURUSD pair which is a proxy for risk when it is rising, and ignored when dropping (because the ECB will lower rates, or so thinking goes) was boosted higher starting at 5 am eastern time. What happened then? Greek Q2 GDP was announced, and instead of declining from -6.5% to -7.0% annualized, the number declined at "only" a 6.2% annualized run rate. Apparently that was the only catalyst needed to launch today's risk on phase, sending the EURUSD 70 pips higher, and futures back to green. So to summarize: the world's 3rd largest economy grew far less than expected despite 30 years of central planning, while Europe's worst economy imploded by just that much less than the worst case expected, and this is "good enough." What's worse is that this may well be the high point of the day as there is nothing else left on the docket.
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Asian equity markets ended the day mostly lower, on concerns over Chinese and other Asian countries' growth prospects. The largest declines were seen in Chinese markets, with the Shanghai composite falling -1.5%. In other major Asian indexes, the Kospi fell -0.72%, the Hang Seng was down -0.27% and the Nikkei was basically unchanged on the day (-0.07%) despite second quarter Japanese GDP growth of 1.4% that significantly under-performed estimates for a 2.3% expansion in Q2. The MSCI Emerging Markets Index dropped 0.3 percent after four weeks of gains.
In Europe, stocks are largely treading water after paring losses earlier in the trading session. Most major European markets are within a few tenths of a percent of unchanged.
In bondland, Treasuries are largely unchanged across the curve, with yields on the 10-year note dipping to 1.65%. 10-year bond yields in Spain and Italy are down slightly on the day, as investors rein in concerns about the prospects for fiscal consolidation and growth in each country. Conversely, German bunds yields have risen about 5 basis points on the day.
The dollar is trading marginally lower against a basket of major currencies, with the DXY index down about -0.2% as the euro strengthened for the first time in five days. Commodities are sharing in the risk-on environment despite weaker Asian growth; WTI is up 72 cents to $93.59 a barrel, while Brent crude is trading nearly $1.50 higher than Friday's close, at $114.50 a barrel. Gold is $2.60 higher, at $1622.80 per ounce.