It was a busy day in terms of dataflow and meetings among policymakers. Yet, investors appeared tired of receiving disappointing macroeconomic indicators and ambivalent messages from the Eurozone leaders. Financial markets waxed and waned with the DJIA and the S&P 500 gaining +0.27% and +0.14% respectively. In the commodity sector, crude oil rebounded with the front-month WTI and Brent crude contract added +0.85% and +0.94% respectively.

The informal EU meeting turned out to be as non-eventful as expected. However, comments from Italian Prime Minister Mario Monti helped the sentiment a bit. He stated that Greece would likely remain in the Eurozone and the majority of leaders supported issuance of bonds, though no details on both issues were given. The dataflow came in with a weak tone generally. The Eurozone manufacturing PMI surprisingly fell to 45 in May from 45.9 a month ago. The market had anticipated a rise to 46. In Germany, the index also slipped to 45 from 46.2 in April. The IFO survey also indicated dampened market sentiment in the Eurozone's largest economy. The business climate index fell to 106.9 in May, compared with consensus of 109.4 and April's 109.9, while the current assessment index slipped -4.2 points to 113.3 during the month. The expectations index also dropped to 100.9 from 102.7 in April, compared with market forecasts of 102. In the UK, the economy contracted -0.3% q/q in 1Q12, down from preliminary estimate of -0.2%.

China's PMI compiled by HSBC and Markit showed that, with a preliminary reading pointing to 48.7 in May from 49.3 in April, China's manufacturing activities may contract for a 7th straight month. The banking sector may face headwind for shrinking loan growth as the economy slows. People familiar with the sector raised their concerns that banks' total new lending will be about RMB 7 trillion in 2012, compares with the government target of RMB8 -8.5 trillion.

In the US, initial jobless claims fell -2K to 370K in the week ended May 19. This sent the 4-week moving average -6K lower to 370K. The manufacturing PMI compiled by Markit fell to 53.9 in May from 56 a month ago. Durable goods orders gained +0.2% in April after a -4.2% contraction in the prior month. The market had anticipated a +0.5% rise. Excluding transportation, the reading contracted -0.6%. While easing from -1.1 drop in March, it missed consensus of a +1.0% gain.