Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1174.90 down $9.80 (comex closing time)

Silver $16.09 down 38  cents (comex closing time)

In the access market 5:15 pm

Gold $1176.50

Silver: $16.16

Gold/Silver trading: see kitco charts on the right side of the commentary

Following is a brief outline on gold and silver comex figures for today:

At the gold comex today, we had a fair delivery day, registering  10 notices serviced for 1,000 oz.  Silver comex filed with 0 notices for nil oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 245.22 tonnes for a loss of 57 tonnes over that period.

In silver, the open interest rose by 1795 contracts despite the fact that Wednesday’s silver price was down by 32 cents.   The total silver OI continues to remain extremely high with today’s reading at 180,138 contracts maintaining itself near multi-year highs despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.

In silver we had 0 notices served upon for nil oz.

In gold,  the total comex gold OI rests tonight at 402,546 for a gain of 3822 contracts despite the fact that gold was down $9.40 on Wednesday. We had 10 notices filed for 1000 oz.

Late last night, we had no change in gold inventory at the GLD,  thus the inventory rests tonight at 709.89 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold.

In silver, /we had no changes in silver inventory at the SLV/Inventory rests at 318.175 million oz

We have a few important stories to bring to your attention today…

1. Today, we had the open interest in silver rise by 164 contracts despite the fact that silver was up in price by 2 cents yesterday.  The OI for gold rose by 3822 contracts up to 402,546 contracts as the price of gold was up by $5.80 yesterday.

(report Harvey)

2,Last night, huge volatility in the Chinese stock markets.

3. Today, 4 important commentaries re  Greece

(Lilico and zero hedge)

4. The rebels from Eastern Ukraine are on the offensive against Ukraine. Today the Ukraine mobilized the Neo Nazis to engage the rebels.

(zero hedge)

5. Danish individuals attack the Danish tax authorities

(zero hedge)

6. IMF slashes growth for the USA.

(IMF/zero hedge)

7. Precious metals trading overnight from Asia/Europe


8. Trading from Asia and Europe overnight

(zero hedge)

9. Trading of equities/ New York

(zero hedge)

we have these plus other stories to bring your way tonight. But first……..

let us now head over to the comex and assess trading over there today.

Here are today’s comex results:

The total gold comex open interest rose by 3822 contracts from 398,724 up to 402,546 as gold was down $9.40 yesterday (at the comex close).  We are now in the big active delivery contract month of June.  Here the OI fell by 518 contracts down to 1544. We had 74 notices served upon yesterday.  Thus we lost 444 contracts or an additional 44,400 oz will not stand for delivery.  No doubt, again, we had a huge number of cash settlements.  The next contract month is July and here the OI rose by 1 contract up to 481.  The next big delivery month after June will be August and here the OI rose by 3,855 contracts  to 265,427. No doubt that the cash settled June contracts, having been bought out for fiat, rolled into August. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 83,940. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was poor at 130,162 contracts. Today we had 10 notices filed for 1000 oz.

And now for the wild silver comex results.  Silver OI rose by 1795 contracts from 178,343 up to 180,138 despite the fact that the price of silver was down in price by 32 cents, with respect to Wednesday’s trading.  The front non active  delivery month of June saw it’s OI rise by 0 contracts remaining at 33. We had 0 contracts delivered upon yesterday.  Thus we neither gained nor lost any silver contracts standing in this non active June contract month. The estimated volume today was poor at 22,999 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 75,152 contracts which is very good in volume. We had 0 notices filed for nil oz today.

June initial standing

June 4.2015



Withdrawals from Dealers Inventory in oz


Withdrawals from Customer Inventory in oz

51,156.437 oz (Brinks HSBC)

Deposits to the Dealer Inventory in oz


Deposits to the Customer Inventory, in oz

50,092.138 oz (HSBC)

No of oz served (contracts) today

10 contracts (1000 oz)

No of oz to be served (notices)

1534 contracts (153,400 oz)

Total monthly oz gold served (contracts) so far this month

2598 contracts(259,800 oz)

Total accumulative withdrawals  of gold from the Dealers inventory this month


Total accumulative withdrawal of gold from the Customer inventory this month

70,941.9 oz

Today, we had 0 dealer transactions

total Dealer withdrawals: nil oz

we had 0 dealer deposit

total dealer deposit: nil oz

we had 2 customer withdrawals

i) Out of Brinks 1000.000 oz  ????

ii) Out of HSBC:  50,092.137 oz

total customer withdrawal: 51,156.437 oz

We had 1 customer deposits:

i) Into HSBC:  50,092.138 oz

Total customer deposit: 50,092.138 oz

We had 1  adjustment:

i) Out of HSBC:  11,030.437 oz was adjusted out of the dealer and this landed into the customer of HSBC>

Today, 0 notices was issued from JPMorgan dealer account and 10 notices were issued from their client or customer account. The total of all issuance by all participants equates to 10 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 2 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the May contract month, we take the total number of notices filed so far for the month (2598) x 100 oz  or 258,900 oz , to which we add the difference between the open interest for the front month of June ( 1544) and the number of notices served upon today (10) x 100 oz equals the number of ounces standing.

Thus the initial standings for gold for the June contract month:

No of notices served so far (2598) x 100 oz  or ounces + {OI for the front month (1544) – the number of  notices served upon today (10) x 100 oz which equals 413,200 oz standing so far in this month of June (12.852 tonnes of gold).  Thus we have 12.852 tonnes of gold standing and only 17.04 tonnes of registered or for sale gold is available:

Total dealer inventory 536,829,434 or 16.69 tonnes

Total gold inventory (dealer and customer) = 7,883,944.288 (245.22 tonnes)

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.22 tonnes for a loss of 57 tonnes over that period.


And now for silver

June silver initial standings

June 4 2015:



Withdrawals from Dealers Inventory

411,7888.792 Scotia

Withdrawals from Customer Inventory

600,269.800 oz (Scotia)

Deposits to the Dealer Inventory


Deposits to the Customer Inventory

411,788.792 oz (JPM)

No of oz served (contracts)

0 contracts  (nil oz)

No of oz to be served (notices)

33 contracts(165,000 oz)

Total monthly oz silver served (contracts)

199 contracts (995,000 oz)

Total accumulative withdrawal of silver from the Dealers inventory this month

526,732.4  oz

Total accumulative withdrawal  of silver from the Customer inventory this month

1,242,227.8 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

we had 1 dealer withdrawals:

i) Out of Scotia;  411,788.792 oz

total dealer withdrawal: 411,788.792 oz

We had 1 customer deposit:

i) Into JPMorgan:  411,788.792 oz

total customer deposit: 411,788.792  oz

We had 1 customer withdrawal:

i) Out of Scotia:  600,269.800 oz

total withdrawals from customer;  600,269.800 oz

we had 0 adjustments

Total dealer inventory: 57.777 million oz

Total of all silver inventory (dealer and customer) 179.807 million oz

The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in June, we take the total number of notices filed for the month so far at (199) x 5,000 oz  = 995,000 oz to which we add the difference between the open interest for the front month of June (33) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.

Thus the initial standings for silver for the June contract month:

199 (notices served so far) + { OI for front month of June (33) -number of notices served upon today (0} x 5000 oz = 1,160,000 oz of silver standing for the June contract month.

we neither gained nor lost any silver contracts that  will stand for delivery in this month of June.

for those wishing to see the rest of data today see:

http://www.harveyorgan.wordpress.com orhttp://www.harveyorganblog.com


The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.

And now the Gold inventory at the GLD:

June 4/ no change in gold inventory at the GLD/Inventory rests at 709.89 tonnes

June 3/late last night: a huge withdrawal of 4.18 tonnes. Tonight’s inventory rests at 709.89

June 2/no change in gold inventory at the GLD/Inventory rests at 714.07 tonnes

June 1/ we had a huge withdrawal of 1.79 tonnes of gold from the GLD/Inventory rests tonight at 714.07 tonnes

May 29/ no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

May 28/ no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

may 27: no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

may 26.2015/we had a slight addition of .600 tonnes of gold to the GLD inventory/inventory rests at 715.86 tonnes

May 22.2015: no changes in gold inventory at the GLD/Inventory rests at 715.26 tonnes

May 21./no changes in gold inventory at the GLD/Inventory rests at 715.26 tonnes

May 20./we had another withdrawal of 2.98 tonnes of gold leaving the GLD. Inventory rests tonight at 715.26 tonnes

May 19/no changes in gold inventory at the GLD/Inventory at 718.24 tonnes

June 4 GLD : 709.89  tonnes.


And now for silver (SLV)

June 4/no change in silver inventory/rests tonight at 318.175 million oz

June 3/ we had a small withdrawal of 138,000 oz of silver inventory/Inventory rests at 318.175 million oz

June 2/ we had a huge addition of 1.243 million oz of silver inventory at the SLV./Inventory rests at 318.313 million oz

June 1/no change in inventory at the SLV/Inventory rests at 317.07 million oz

May 29/no changes in inventory at the SLV/Inventory rests at 317.07 million oz

May 28/a small deposit of 143,000 oz of silver added to the SLV/Inventory rests at 317.070 million oz

May 27/we had another 1.003 million oz withdrawn from the SLV/Inventory rests tonight at 316.927 million oz

May 26.2015: no change in SLV /Inventory rests at 317.93 million oz

May 22.2015: no changes in SLV/Inventory rests at 317.93 million oz

May 21.no changes at the SLV/Inventory rests at 317.93 million oz

May 20/no changes at the SLV. Inventory rests at 317.93 million oz/

June 4/2015: no change in inventory/SLV inventory at 318.175 million oz/


And now for our premiums to NAV for the funds I follow:

Sprott and Central Fund of Canada.

(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded at Negative 8.1% percent to NAV in usa funds and Negative 7.9% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 60.9%

Percentage of fund in silver:38.7%

cash .4%

( June 4/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to +.30%!!!!! NAV (June 4/2015)

3. Sprott gold fund (PHYS): premium to NAV rises to  .25% to NAV(June 4/2015

Note: Sprott silver trust back  into negative territory at +.30%.

Sprott physical gold trust is back into negative territory at -.25%

Central fund of Canada’s is still in jail.

Last week Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:

SII.CN Sprott formally launches previously announced offers to Central GoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)

Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.

Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.

Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *


Early morning trading from Asia and Europe last night:

Gold and silver trading from Europe overnight/and important physical


(courtesy Mark O’Byrne/Goldcore)

Bitcoin “Total Crypto Breakdown” Shows Risks To Non-tangible Assets

By Mark O’ByrneJune 4, 20150 Comments

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– Bitcoin wallet app Blockchain suffers major security blunder

– Poor tech sees multiple accounts being created using same address

– Security lapses in electronic and digital currencies not uncommon

– Bitcoin and cryptocurrencies in infancy but are useful tools

– Physical gold offers most secure form of wealth preservation

Blockchain.com, which claims to be the maker of the most popular Bitcoin wallet, suffered at the weekend what the Guardian describes as a “total crypto breakdown”, highlighting once again the vulnerability of electronic and digital currencies to human and technological errors and hacking.

Multiple accounts were created using the same bitcoin address which meant that many users apparently had access to the same pool of funds which led to losses for a few.

The newspaper reports that a “series of bad development choices” in the software “all failed in the worst way possible”. It was operating in the typical “belt and braces” mode where if one line of defence failed another should still be operational.

“Bitcoin wallets are typically created by randomly generating a public address and a related private key. As a result, it is important for address and key to be truly random, or else it may be possible to guess the private key by looking at the public address.”

In the case of Blockchain.com, the random code was generated from two different sources which were then combined. The first was the random number generator on the device on which the app was being installed.

However, some Android phones failed to deliver the code to the blockchain app which meant its random code was generated entirely from the second source. The second source was an online service called random.org.

“But on 4 January, Random.org strengthened the security of its website, requiring all visits to be made over an encrypted connection. The blockchain app, however, continued to access the site through an unencrypted connection. So rather than getting a random number, as expected, it got an error code telling it that the site had moved.”

Blockchain then unwittingly used the same error code in creating the address for multiple users, the devices of whom had failed to produce the first line of random code.

“The magnitude of the error sparked shocked reactions from information security professionals.”

Security lapses in software for managing digital and electronic currencies are by no means uncommon. The constant march forward of technology often means that less attention can be paid to older systems which have not yet become obsolete.

Early last year banking giant JP Morgan was hacked. It had its system hacked and details of 76 million customers were stolen (Cyber Attacks Growing In Frequency – Entire Western Financial System Is Vulnerable). JP Morgan use the “belt and braces” approach of two-factor authentication but in one older overlooked system they were still using a less sophisticated single password system.

In February, we covered the story where Russian cybersecurity firm Kaspersky lab uncovered an international hacking group who had managed to tamper with customers accounts in order to steal possibly up to $1 billion from over 100 banks globally (International Hacking Group Steals $300 Million – Global Digital Banking System Not Secure).

There have been numerous incidences in recent months where strategically vital monetary, financial and infrastructural computer systems have been seen to be very vulnerable to human error and malintent.

We can see the benefits of Bitcoin and cryptocurrencies in the coming years. We are particularly excited about the potential of the Blockchain itself (Blockchain Promises To Be As Disruptive A Technology As The Internet)

Cryptocurrencies are a useful tool which could provide a vital degree of short-term liquidity and means of exchange in the event of capital controls and or a banking or currency collapse.

However, given their non-tangible nature and other risks posed to them, we do not view them as a store of value or a safe haven asset akin to physical gold bullion in your possession or stored in the safest vaults in the world in the safest jurisdictions in the world.

Must Read Guides:

Essential Guide To Storing Gold In Singapore
Essential Guide To Gold Storage In Switzerland


Yesterday’s AM LBMA Gold Price was USD 1,186.60, EUR 1,067.23   and GBP 777.60 per ounce.Today’s  AM LBMA Gold Price was USD 1,182.45, EUR 1,041.76 and GBP 766.55 per ounce.

Gold fell $8.10 or 0.68 percent yesterday to $1,185.30 an ounce. Silver slipped $0.25 or 1.49 percent to $16.55 an ounce.

Gold in Singapore for immediate delivery fell 0.2 percent to $1,182.80 an ounce near the end of the day,  while gold in Switzerland edged marginally higher.

Gold stumbled to its lowest in three weeks today despite very mixed U.S. economic data – there is a perception amongst some market participants that the U.S. economy is recovering and a U.S. rate hike will be occur … timing undetermined.

Physical gold demand remains robust in China and India and this is supporting gold near the $1,200 level.

The chart below shows the cumulative gold buying in “Chindia” since 2008. As can be seen gold demand has been and continues to be voracious. Monthly global gold production is shown in the bottom section highlighting the rampant gold demand of Chindia.

U.S. weekly jobless claims are at 12:30 GMT and tomorrow’s nonfarm payrolls figure will be watched.

Gold is moving into the quiet summer months. Demand from Asia remains robust with premiums in China at $1.50-$2 over the global benchmark and SGE withdrawals robust.

Greek Prime Minister Alexis Tsipras said a deal with creditors was “within sight” after he stepped out of talks with senior EU officials in Brussels. Tsipras said that they would make the IMF payment on Friday.

This has taken some of the safe haven appeal out of gold bullion and moved money into other assets as market participants see a Grexit as less of a threat. Although stock markets today are sharply lower suggesting jitters on bond markets are spreading to equities.

In late European trading gold is down 0.27 percent at $1,182.40 an ounce. Silver is off 0.17 percent at $16.47 an ounce, while platinum is up 0.17 percent at $1,105.55 an ounce.




The head of Russia’s Central Bank is determined to increase the country’s gold reserves to its previous levels in 2012-2013, from $360.5 billion up to $500 billion.

Russia will increase its gold reserves by up to $500 billion, said Elvira Nabiullina, the head of Russia’s Central Bank, Rossiyskaya Gazeta reported.


Americans Fear Beijing, Moscow May Introduce New Gold Standard

Russia will aim at $500 billion, despite the fact that a sufficient level of gold reserves for the country is $188 billion, Nabiullina said.Currently, Russia owns $360.5 billion worth of gold reserves. The amount covers more than three months of imports, short-term foreign debt and 20 percent of Russia’s entire money supply.

The country’s gold reserves exceeded $500 billion during 2012-2013, when global oil prices were at their peak. However, right now due to low oil prices, the Russian budget will receive $150-170 billion a year compared to a few years ago before the crisis.

“Recent experiences forced us to reconsider some of our ideas about sufficient and comfortable levels of gold reserves,” the head of the Central Bank said, adding that the Russian economy needs the amount of gold reserves to be able to cover negative capital outflow for the next 2-3 years.

Russia will accumulate its gold reserves gradually in order to avoid high inflation, Nabiullina concluded

Read more:



(courtesy TF Metals/Turd Ferguson)

TF Metals Report: Avoiding the GLD

Submitted by cpowell on Thu, 2015-06-04 17:58. Section: Daily Dispatches

1:57p ET Thursday, June 4, 2015

Dear Friend of GATA and Gold:

Metal in the exchange-traded gold fund GLD is being drained for shipment to Asia, where people know that they don’t own gold if they can’t hold it, the TF Metals Report’s Turd Ferguson writes today. His commentary is headlined “Avoiding the GLD” and it’s posted at the TF Metals Report here:


CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.


And now overnight trading in stocks and currency in Europe and Asia

1 Chinese yuan vs USA dollar/yuan weakens to 6.2019/Shanghai bourse green and Hang Sang: red

2 Nikkei closed down by 14.68  points or .07%

3. Europe stocks all in the red/USA dollar index down to 94.78/Euro rises to 1.1360

3b Japan 10 year bond yield: huge rise to .50% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.11/very ominous to see the Japanese bond yield rise so fast!!

3c Nikkei still just above 20,000

3d USA/Yen rate now well above the 124 barrier this morning

3e WTI 59.78 and Brent:  63.88

3f Gold down/Yen up

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil down for WTI and down for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund huge to 92 basis points. German bunds in negative yields from 3 years out.

Except Greece which sees its 2 year rate rise  to 22.26%/Greek stocks down 2.45%/ still expect continual bank runs on Greek banks /Greek default inevitable/

3j Greek 10 year bond yield falls to: 10.60%

3k Gold at 1183.00 dollars/silver $16.50

3l USA vs Russian rouble; (Russian rouble falls 1/5  rouble/dollar in value) 53.41 , the rouble is still the best acting currency this year!!

3m oil into the 59 dollar handle for WTI and 63 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/China may be forced to do QE!!

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9302 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0564 well above the floor set by the Swiss Finance Minister.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 3 year German bund remains in negative territory with the 10 year moving still near negativity at +.92/

3s Six weeks ago, the ECB increased the ELA to Greece by another large 2.0 billion euros.Four weeks ago, they raised it another 1.1 billion and then two weeks ago they raised it another tiny 200 million euros to a maximum of 80.2 billion euros. Last week, the limit was not raised. Yesterday, the ECB raised the ELA by 1/2 billion euros to 80.7 billion euros.The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially. The ECB is contemplating cutting off the ELA which would be a death sentence to Greece and they are as well considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.

3t Greece  paid the 700 million plus payment to the IMF last Wednesday but with IMF reserve funds.  It must be paid back in on June 9.

3 u. If the ECB cuts off Greece’s ELA they would have very little money left to function. So far, they have decided not to cut the ELA

4. USA 10 year treasury bond at 2.40% early this morning. Thirty year rate just above 3% at 3.13% / yield curve flatten/foreshadowing recession.

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

Volatility Explodes: China Crashes Then Soars; Bund Tumble Continues With Yield Touching 0.99%

For once, Mario Draghi was right.

A day after the European central bank head warned of a spike in volatility, volatility did just that. Only it wasn’t just the German Bund, which as we previously noted suffered its biggest two day drop since the 1990s – this time it was China, whose Shenzhen index is where Bill Gross said in a tweet would be the next “short of a lifetime (not just yet)”.

And sure enough, just a few hours later, the Shenzhen suffered its biggest crash in more than two years, plunging 6.2%, with the Shanghai Composite also tumbling 5.35%. The catalyst: much as Gross would like to take credit wasn’t the Bond King in absentia, but a local broker, Golden Sun, which announcedshortly after the start of trading that it would suspend margin purchases of shares on Shenzhen’s startup board, ChiNext. A drop, incidentally, which brought the YTD gain on the ChinExt to just over 100%.

Promptly the concerns about a long-overdue market crash emerged: “The market has seen strong gains and sentiment is turning cautious with investors worrying if the index will repeat the correction seen years ago,” Shenwan Hongyuan analyst Qian Qimin told Bloomberg “It’s a market built purely on sentiment, and once that sentiment changes, people will follow suit to take profit. Bocom’s Hong Hao added that “Once the selling starts, it will ripple through the market especially in a highly leveraged environment.”

And then, just as suddenly as the selling started, it stopped. Not only did it stop, but a furious wave of buying in the closing hours wiped out the entire 6% loss, and the Shenzhen closed barely unchanged, down just 0.6%. The move on the Composite was even more unprecedented: following the 5.35% slump, the exchange actually closed up 0.8%, with bubble mania volatility reminiscent of what happened to bitcoin at its peak.

Then Europe opened, and as if continuing on the negative sentiment (not the late BTFD surge) German Bunds resumed their crash with European stocks and US equity futures all falling sharply. In fact, as the chart below shows, the Bund rose within 1 basis point of the critical 1.00% level before modestly retracing some of the major losses. The ongoing slide in Bunds has dragged both European peripheral and US Treasurys lower, with the 10Y yield rising as high as 2.42%, the highest since October.

It wasn’t just China that led to the overnight volatility: it was also Greece, whose prime minister rejected Europe’s “best and final” proposal, preserving the hope for a deal in the next few days on terms more agreeable to Athens even though the Troika has made it quite clear such a deal won’t come. As for today’s payment to the IMF, he added “don’t worry.“

In any event, it was once again all about Bund, where SocGen noted moments ago that “Bund buyers are few and far between” adding “even investors who are long-term bulls seem to be short-term bears, with many looking for better levels before stepping in and adding to longs. Many are still very long, which isn’t helping.”

This has been a continuation of the recent sell-off seen in fixed income products over the past month with Bunds down over 1000 ticks from their best levels this year. This move was extended yesterday by comments from ECB’s Draghi who said that there could be more volatility to come and they are willing to look through this. In terms of this morning, German bonds have been subject to a significant bout of CTA selling which has subsequently seen a substantial course of bear-steepening in the German curve.

From an equity stand-point, stocks in Europe are also lower this morning after the DAX opened below its 100DMA and has

continued to drift lower since the open. Additionally, strength seen in the EUR has weighed heavily on German exporters with BMW (-2%) and Daimler (-2.4%) both lower. Furthermore, a lack of progress in discussions between Greece and their European counterparts has also erased some of the optimism heading into discussions, this has also been coupled with some talk doing the round about a dramatic rise in ATM withdrawals in Greece over the past week and comments from the Greek deputy shipping minister who said he could not accept current reform proposals. On a sector specific basis, utilities underperform in the wake of the unfavourable German nuclear tax ruling, while the CAC is the laggard index with losses of 2%.

At last check ,US equity futures were down 0.7% on heavier than usual volume, although should volume trickle down as it usually does during the regular session, expect all of the losses which have unwound yesterday’s modest gains, to evaporate just like in China.

In FX markets, EUR/USD has printed its highest reading in 2 weeks (USD-index -0.6%) with higher yields helping to support EUR, furthermore EUR/USD has also taken out stops through 1.1300 where there was a touted option barrier with the move said to be exacerbated by hedge fund buying. Moves in the EUR have subsequently boosted some of its other major counterparts with EUR/JPY and EUR/GBP at 5 month and 5 week highs respectively.

In the commodity complex, price action has been particularly muted despite the volatility endured in other asset classes with energy prices sitting tight ahead of tomorrow’s OPEC meeting while spot gold and silver failed to extend on their  modest uptick seen alongside the European open.

In summary: European shares remain lower, though off intraday lows, with the basic resources and utilities sectors underperforming and tech, telco outperforming. Greek PM rejected proposals that would unlock bailout funds necessary to avert a default. The French and German markets are the worst-performing larger bourses, the Swiss the best. The euro is stronger against the dollar. Japanese 10yr bond yields rise; German yields increase, reach highest since Sept. Commodities little changed, with nickel, copper underperforming and natural gas outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, Challenger job cuts, nonfarm productivity, unit labor costs due later.

Market Wrap:

S&P 500 futures down 0.6% to 2103.3

Stoxx 600 down 1.4% to 390.6

US 10Yr yield up 3bps to 2.4%

German 10Yr yield up 6bps to 0.94%

MSCI Asia Pacific down 0.4% to 149.6

Gold spot down 0.2% to $1182.8/oz

Eurostoxx 50 -1.5%, FTSE 100 -1.3%, CAC 40 -1.7%, DAX -1.4%, IBEX -1.1%, FTSEMIB -1.2%, SMI -0.8%

Asian stocks fall with the Shanghai Composite outperforming, after falling as much as 5% earlier, and the ASX underperforming; MSCI Asia Pacific down 0.4% to 149.6

Nikkei 225 up 0.1%, Hang Seng down 0.4%, Kospi up 0.5%, Shanghai Composite up 0.8%, ASX down 1.4%, Sensex down 0.1%

Euro up 0.71% to $1.1355

Dollar Index down 0.71% to 94.79

Italian 10Yr yield up 3bps to 2.21%

Spanish 10Yr yield up 4bps to 2.18%

French 10Yr yield up 6bps to 1.23%

S&P GSCI Index down 0% to 436.1

Brent Futures up 0.2% to $63.9/bbl, WTI Futures up 0.3% to $59.8/bbl

LME 3m Copper down 1% to $5950.5/MT

LME 3m Nickel down 1.1% to $12855/MT

Wheat futures down 0.5% to 508.3 USd/bu

Bulletin headline summary:

A failed attempt by the German 10yr to breach the 1.00% yield level to the upside acts as a source of support for

European asset classes

Sentiment for equities have been soured by a lack of progress in Greek negotiations and the broadly stronger

EUR with the CAC lower by almost 2%

Looking ahead, today sees the release of the weekly jobs data from the US, BoE rate decision, as well as potential comments from ECB’s Knot and Fed’s Tarullo.

Treasuries fall for a fourth day, 10Y yield rises to 2.423%, highest since October, as EGB rout continues; German bund yield approaching 1% level, up from record low 0.049% on April 17.

UST selloff “purely a liquidity-driven event” spurred by EGBs; “however nothing fundamentally has changed,” with government regulation to blame for thin balance sheets, lack of risk-takers, ED&F Man head of U.S. rates Tom DiGaloma writes

Greek PM Tsipras will convene his inner circle to plot the next move in the standoff with international creditors after a round of top-level talks failed to yield a breakthrough

After meeting with Juncker and Dijsselbloem in Brussels, Tsipras stuck to his position that any basis for an accord must be a Greek proposal

The excessive strength in the yen that damaged Japanese manufacturing in recent years has now been corrected, according to an ally of Bank of Japan Governor Haruhiko Kuroda

Discussions at this week’s OPEC summit are mostly about pumping more oil, with Iraq to increase exports this month and Iran urging group to make room for more output when sanctions recede

China’s benchmark stock index erased losses after tumbling as much as 5.4% on news a brokerage suspended margin financing for investors in smaller companies

Sovereign 10Y bond yields surge. Asian stocks mostly lower, European stocks plunge, U.S. equity-index futures drop. Crude oil higher, copper and gold lower

DB’s Jim Reid completes the overnight market summary

The recent rising yield environment has so far had limited impact on credit, especially HY. However yesterday saw another test with Bunds (as already highlighted) hitting YTD yield highs having climbed +16.8bps. That’s +39.6bp this week alone. Yesterday’s move seemed to be triggered by Draghi’s press conference where he warned investors to expect more fixed income volatility dashing hopes that he would try to calm markets after the recent bond wobbles. He also exuded confidence that QE was working in increasing growth and inflation but that it still required full implementation of QE to achieve their objectives. He did say they could if anything do more if financial/economic conditions tightened. There was also an unsurprising upgrade to inflation forecasts for this year to +0.3% (from 0.0%), while 2016 and 2017 forecasts were kept at 1.5% and 1.8% respectively. Growth is expected to be 1.5% in 2015, before rising to 1.9% in 2016 and 2% in 2017 (a -0.1% mechanical revision versus previous forecasts).

The lurch higher in yields yesterday was also notable with the 4y Bund trading back in positive territory (+0.02%) for the first time since early December. There were similar moves for other core European bond markets yesterday. 10y yields in Netherlands (+15.7bps), Sweden (+15.8bps) and France (+14.7bps), amongst others, took a steep leg higher. Peripherals were very much the laggard yesterday as 10y yields in Spain, Italy and Portugal closed just +5.3bps, +5.3bps and +3.1bps higher, although that may have more to do with the move in Greek yields as the 10y in particular ended 62bps tighter as confidence mounted that we might be one step closer to a resolution. The Euro rose for a second consecutive session, ending 1.11% higher, while equity markets were fairly mixed on the whole with the Stoxx 600 (-0.13%) modestly lower and the DAX (+0.80%) and CAC (+0.59%) higher.

Data flow in Europe yesterday largely played second fiddle to the Draghi comments. However there were some positive signs to take after the final services PMI reading for May in the Euro area was revised up 0.5pts to 53.8. As a result the composite was revised up 0.2pts to 53.6. The gains were led by France where the composite was revised up 1pt to 52, while in Germany the composite fell 0.2pts to 52.6. Elsewhere, Euro area retail sales for April were above market (+0.7% mom vs. +0.6% expected), helping push the annualized rate to +2.2% yoy from +1.7% previously. Unemployment for the region fell one-tenth of a percent to 11.1%. In the UK there was a sharp fall in the services PMI for May, dropping 3pts to 56.5. That dragged the composite down 2.6pts to 55.8.

Along with the bond market, Greece dominated headlines once again last night. Following a meeting in Brussels with the EC’s Juncker and Dutch Finance Minister Dijsselbloem late last night, Greek PM Tsipras was noted as saying that the two sides were ‘very close’ on primary surplus targets and that there was a ‘constructive’ will from the European Commission to reach a common understanding. The bad news however, was that Tsipras also acknowledged that differences still remain, particular around pension reforms. The PM was quoted as saying that ‘the realistic proposals on the table are the proposals of the Greek government’ and that we can’t make the same mistakes as in the past. With talks set to continue today, focus will turn to Friday’s IMF repayment. Last night’s comments from Tsipras – when questioned by reporters about whether or not Greece will make Friday’s obligation – will fuel hope that the payment will be made after the PM said not to worry about it and that Greece had also already repaid billions to the fund. These contradict earlier comments from a Syriza spokesman on Greek TV who said that ‘if there is no prospect of a deal by Friday, we will not pay’. Prior to last night’s headlines, DB’s George Saravelos published his latest update trying to make sense of the fast moving developments. He concluded that a Greek government decision on whether to accept an agreement with European creditors is inevitable over the next two weeks, but that disbursements are unlikely until the noisy political process has materialized. He notes that an agreement would be a major step forward, but the domestic political risks around the ultimate resolution would follow.

Back to markets, the significance of the moves in Europe weighed on US Treasuries once more as we saw the benchmark 10y yield close +10.2bps higher at 2.365%, a +24.3bps move this week already with the yield now the highest since November 12th. The S&P 500 (+0.21%) shrugged off weakness in utility stocks as the move higher in rates saw a bid for financials in particular. With the influence of a stronger Euro, the DXY ended 0.50% lower although had firmed in the lead up to Draghi’s press conference following the early afternoon data releases, with the latest trade balance and ADP print in particular helping find some support.

Just on this, yesterday’s ADP employment report for May will likely lift hopes for a solid payrolls print tomorrow after the 201k reading (which was more or less in line with expectations of 200k) rose 36k from April. The print actually marked the first monthly increase since November last year. April’s trade balance meanwhile showed the deficit shrinking to $40.9bn (versus $44bn expected) from a revised $50.6bn last month, reversing the West Coast ports inspired effect of last month. Having made a significant downward impact to Q1 GDP, yesterdays data meant we saw the Atlanta Fed GDPNow model upgrade their Q2 GDP forecasts to 1.1%, from 0.8% just a couple of days ago. There was some disappointment in the ISM non-manufacturing reading meanwhile, with the 55.7 reading falling 2.1pts from May and coming in well below market expectations of 57.0. The reading was actually the lowest in 13 months as new orders, employment and business activity components all declined. Lastly there was a modest downgrade to the May services PMI (down 0.2pts to 56.2), resulting in the composite falling a tad to 56.0 (from 56.1 in April).

The focus of yesterday’s Fedspeak was on Chicago Fed President Evans who said that the hurdle for increasing rates is ‘pretty high’ currently and that ‘we need to get demand moving up more strongly’. Speaking after the closing bell, the St Louis Fed President Bullard (non-voter) said that recent soft data has made it appropriate for the market to move back the likely date of policy firming. Bullard went on to say that the weakness in Q1 was likely transient however and that we should get stronger data later this year to enable the normalization process to begin.

Just wrapping up the news-flow in the US yesterday, the Fed’s Beige Book showed that the US economy is experiencing ‘moderate’ to ‘modest’ growth in seven of the twelve Fed districts, with the remainder showing ‘mixed’ to ‘slight’ growth signals.

Before we look at today’s calendar, Asian bond markets are adding to the global rout with 10y yields in Australia (+11.6ps), Japan (+4.0bps), Indonesia (+6.4bps) and Singapore (+3.7bps) all higher. 10y Treasuries are another 0.5bps wider this morning. There’s been a sharp turnaround in equity markets meanwhile with the Shanghai Comp and CSI 300 -1.78% and -1.74% respectively, the bulk of the falls appearing to come in the last ten minutes before we go to print although it’s not entirely clear what’s caused the sell-off. Elsewhere, the Hang Seng (-1.39%) has followed the China losses, while the Nikkei (+0.24%) and Kospi (+0.31%) are both trading higher.

Onto today’s calendar now, French employment data is the early release this morning before we get the BoE meeting around midday. This afternoon in the US we’ve got more employment indicators with Challenger job cuts for May and the latest weekly initial jobless claims data. The final Q1 unit labour costs and nonfarm productivity round off the releases today. The Fed’s Tarullo will be the latest Fed official to speak.


Last night in China: just take a look at the volatility. Totally nuts!!

(courtesy zero hedge)

China Is

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