The BoJ governor Shirakawa’s comments this morning were watched very closely as he expressed a somewhat optimistic view of the current economic and financial situation in Japan. This said, tight funding and a very protective stance by local banks with regards to lending still made credit conditions very “tight”. These comments come after the Tankan survey released last week showed Japanese business sentiment had improved less than expected but that the corporate finance market was righting itself. The survey also showed that financial conditions for large institutions rose 5 points to 1 – the first improvement in 2 years.

On June the 8th Alcoa unofficially starts off the Q2 earnings season. Markets are worried that the rally that started in March was simply a bear market rally, a correction before we head lower. U.S VP Biden said yesterday that the Obama administration had misjudged the depth of the crisis as they had projected unemployment to peak at 8% if the $787Bn bill was passed – 8% has come and gone we are now at 9.6% - the highest rate in half a century.

In the current market conditions we see a return of risk aversion. This will benefit both the Yen and Dollar as they continue to benefit from their haven status. Last week ECB president Trichet said “A strong dollar is in the interests of the U.S.A”. Consumers continue to be the main focus – higher unemployment, dismal consumer confidence will stifle the recovery everyone was hoping for.

G10 Advancers and Decliners vs USD

Global Indexes Current Level % Change
Nikkei 225 Index9680.87- 1.38
Hang Seng Index17979- 1.23
Shanghai Index3124.6+ 1.18
FTSE 100 Index4180- 1.32
DAX Index4630- 1.65
DJIA futures8280- 2.63
Nasdaq futures1796- 2.67

World Markets Current Level % Change
Gold924.68- 0.81
Silver13.07- 2.39
VIX27.95+ 6.60
Crude wti64.27- 3.69
USD Index80.71+ 0.32

Todays Calender Estimates Previous Country / GMT
US - ISM Non-Manufacturing composite (JUN)4644USD / 14:00