Pre-Market

Lots of stuff to go over from the overnight session.

Europe was the big news with individual and composite GDPs released overnight, the rumors that an upside surprise would come this quarter were smashes with the releases, sending European GDP to the fastest annual decline since 2009.

Here are some of the readings vs consensus:  Germany (+0.1%, Exp. 0.3%), to France (-0.2%, Exp. 0.1%), to Italy (-0.5%, Exp. -0.4%), and to the entire Eurozone (-0.2%, Exp. 0.1%). The first estimate of Eurozone Q1 GDP comes in at -0.2% qoq, below consensus of a 0.1% drop. The economy shrank by 1.0% yoy, the worst rate since Dec-09. The decline of 0.5% qoq in Italy means that the economy has been in recession continuously since Q4-11. A 0.2% qoq drop in France means the economy has ‘double-dipped’, posting a second back-to-back drop in GDP since Q4-08. The increase of 0.1% qoq in Germany was disappointing and shows the economy is not in a position to support demand in the weaker member states.

SocGen's opinion, Annual growth rate is not improving, time for the ECB to stop its balance sheet from contracting."

As a result, the EUR/USD took it on the chin...

 EUR/USD slides all night...

At 11 pm last night I found this chart of 30 year US treasury futures interesting, but I didn't post the positive divergence as it was redundant as I had already told you yesterday they were under accumulation at lows,..

 30-year US Treasury futures as of 11 p.m. Tuesday

Here's what they did from there, gaining all night.

As you might expect, the entire curve did better, here's the 10-yeear futures overnight.

As you might imagine seeing the EUR/USD, the $USDX rallied to highs of the week as I showed the $USD broke out from a seven+ month base yesterday...

$USDX hitting new highs for the week, in actuality probably for several months, but they seem to have known something just before the US Producer Price Index and Empire State F_E_D were released.

PPI dropped from -0.7%, on expectations of a -0.6% drop, the lowest MoM PPI since July 2009.

The NY  Empire Fed index that was even more disappointing, hopes were for an increase from 3.05 to 4.00 in May, instead it posted the first contractionary print since January, printing at -1.43. It gets worse looking at the data: New Orders dropped from 2.20 to -1.17, Shipments also slid into negative from 0.75 to -0.02, Unfilled Orders deteriorated even more from -3.41 to -6.82, Inventories contracted from -4.55 to -7.95, Prices Paid and Received both contracted, but worst of all, the Average Employee Workweek dropped from 5.68 to -1.14, meaning the collapse in the average workweek persists, and even if the BLS reports a positive print for May, the report will once again mask the declining aggregate end demand for labor.

What is worst, the future general business conditions index declining for a second consecutive month, dropping six points to 25.5. Add to this the just 1.2% expectation in increasing prices received - the lowest on record - and one can see why the US manufacturing sector is collapsing.

All Index futures have slid relatively far over the last 1-2 hours, all in line intraday, but looking back their longer positioning is in a leading negative area.

I have to wonder if this increase in the Yen has anything to do with it as the timing is very similar.

Yen.

I'd imagine today's sentiment will be wrestling between, "The F_E_D can't leave us now!" and "Oh crap, with this economy, what happens if the F_E_D leaves us at these multiples?"

More data on the way...