International Headlines;China regulators telling banks to stress test for a 50-60% home price decline under worst case scenario (previously had said to use 30% decline)

·         Spain – Sold the max. amt of 3yr notes at an auction this morning and saw borrowing costs ease. Spain sold Eur3.5B of 3yr debt at a yield of 2.276% vs. 3.317% yield at its June 10ths auction w/a bid-to-cover of 1.9x (was below last June’s 2.1x). Bloomberg

·         Greece - IMF/ECB/EC issue joint report on Greek eco recovery - overall pos. tone - "Our overall assessment is that the program has made a strong start. The end-June quantitative performance criteria have all been met, led by a vigorous implementation of the fiscal program, and important reforms are ahead of schedule. However, important challenges and risks remain"   http://www.imf.org/external/np/sec/pr/2010/pr10308.htm   

·         Germany – industrial orders came in +3.2%, surpassing expectations (nearly 2x expected growth) (Reuters) 

·         Japan - JPMorgan trims Q2 GDP forecast following today's soft consumption data - The Cabinet Office's real private consumption index edged up 0.1%m/m, sa in June, softer than suggested by last week's retail sales and household spending. More disappointment came from a large downward revision in May from -0.4% to -1.0%, which left the 2Q average down 1.7%q/q, saar after an impressive 5.6% jump in 1Q. The revision of May and the soft reading in June was unexpectedly weak, so that we revised down our real GDP forecast (due on Aug 16) to 2.3% in 2Q from 2.8% with flat private consumption (instead of a 1.0% increase).     

·         Japan may tap its pension reserves to cover shortfalls in pension benefits for the next fiscal year; this could force the Japanese pension, the world’s largest such fund, to sell some of its stock and bond investments (Reuters)

·         Japan’s PM hints at the potential for more stimulus – PM Nato says he was closely watching the Japanese economy to see if fresh stimulus was needed – Reuters

·         Japan – Office Vacancy rates fell in Tokyo for the first time in 2.5yrs in July according to a brokerage company Miki Shoji. The measure of unoccupied office units fell to 9.1 percent last month. Bloomberg

·         China regulators telling banks to stress test for a 50-60% home price decline under worst case scenario (previously had said to use 30% decline)    Bloomberg  

·         China’s equity rally over the last few weeks could be a pos. leading indicator for global stock market; China has appeared to reach inflection points prior to other global markets going back several yrs – Bloomberg 

·         Kuwait - Moody's Investors Service has today changed the outlook on Kuwait's Aa2 sovereign ratings to stable from negative.

·         New Zealand Q2 Unemployment Rate Rose More Than Expected - Rose to 6.8% from Q1’s +6% vs. St. 6.2%. Bloomberg