German Cons. Confidence, French GDP, US GDP

Today is a slow day on the macro number front, after yesterday’s positive data surprises from the US and before Thursday's European numbers. The European finance ministers convene today for a pre-meeting before the actual leader’s meeting on Thursday and Friday. Bond markets have already been nervous enough, and there are little signs that the meetings will result in an agreement on the banking union. Thus, any statements later today could provide more information on whether the ‘Cyprus model’ of little or no EU taxpayer money is the way forward, which would be negative for the crisis countries’ bond markets. A positive for the day will be China’s central bank, which announced late on Tuesday that it will provide liquidity if and when necessary – surely a relief to the stressed interbank markets – both Reuters and Bloomberg have the story.

Today’s other events include the Bank of England’s latest Financial Stability Report at 09:30 GMT, probably calling for capital strengthening of the island nation’s banks. Also of interest is a speech by European Central Bank’s Mersch at 15:15 GMT.

German June GfK Consumer Climate Survey (06:00 GMT). The consensus forecast for June is 6.5, unchanged from May, but at the highest level in almost six years. German consumers are very optimistic indeed: interest rates are very low, unemployment is near the lows seen in two decades, inflation is minimal and considerable wage increases have been agreed upon. Never mind that the economy is barely growing – as long as the German risks from the euro crisis are seen to be contained, the general population is happy. Higher confidence should be seen as positive for the euro, as only a serious downturn would push Germany to accept new unconventional monetary measures from the European Central Bank – all of which would weaken the euro. Also, optimistic households effectively guarantee smooth elections and a new term for the Merkel-led coalition.

French Gross Domestic Product (06:45 GMT). GDP is expected to have fallen by 0.2 percent on a quarterly basis, and 0.4 percent on an annual basis. This is the final revision to the first quarter data, and only a small revision to the annual growth number (previously -0.3 percent) is expected. The slightly negative and thereby recession like growth rate is a reminder that Europe's problems are hardly solved, and even the core countries are vulnerable to the crisis and policy errors.

US Q1 Gross Domestic Production third estimate (12:30 GMT). No major changes are expected to the first quarter’s data. Breaking up the GDP numbers to contributions shows that both personal consumption and private investments have been growing at above-average rates, but weak exports and especially the fall in public spending and investments drops the total GDP growth number below its long-term average. Should the private sector consumption and investment growth rates fall to their long-term averages, the overall growth rate would be one percent lower than currently; just something to think about as mortgage rates have risen and refinancing at lower rates has provided households with more spending power.