Equity Indices

European shares hit a near four-month low and yields on lower-rated euro zone sovereign debt climbed to their highest point since November, as financial markets braced for the possibility of Greece defaulting on its debt.  Markets were also cautious ahead of the start of a two-day meeting of the Federal Reserve, the latest step towards the U.S. central bank's first rise in interest rates in almost a decade.  But the focus remained squarely on Greece's fate in the euro zone after both Athens and its creditors hardened their stances following the latest breakdown in talks.

Interest Rates

 Benchmark Bond Yields

The Treasury on Tuesday accepted Euro 2.00 million in 91-day Treasury Bills at an average yield of 0.03 percent and 10 million 181-day Treasury Bills at an average yield of 0 percent. Outstanding Treasury Bills amount to Euro 214,050,000 - an increase of Euro 10 million from the previous week.   

Japan's export growth slowed for a second straight month in May, with weak external demand now threatening to erode economic growth in the current quarter. Ministry of Finance (MOF) data showed exports grew 2.4 percent year-on-year in May, less than a 3.5 percent gain seen by economists and a 8.0 percent rise in the prior month. Compared with April, exports fell 2.7 percent. Export growth, in tandem with domestic demand, is seen as crucial for building on the momentum evident from recent data showing stronger-than-expected economic expansion - led by corporate capital expenditure at the start of the year.

U.S. housing starts fell in May after a hefty increase the prior month, but a surge in permits for future construction to a near eight-year high suggested the pullback was temporary and pointed to underlying strength in housing.  Groundbreaking dropped 11.1 percent to a seasonally adjusted annual pace of 1.04 million units, according to the Commerce Department. That partially reversed April's large gain. April starts were revised up to a 1.17 million-unit rate, the highest since November 2007.  

Forex

The Euro was held hostage by the crisis in Greece while the dollar held firm after solid U.S. housing data bolstered the case for the U.S. Federal Reserve starting rate hikes as early as in September.  The dollar held firm against most other currencies as investors expect Fed policymakers to intimate that U.S. interest rates will start rising later this year after news of U.S. housing permits for future construction surging to a near eight-year high.

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