Equity Indices

U.S. stocks fell sharply in heavy trading on Monday and the S&P 500 and the Dow had their worst day since October after a collapse in Greek bailout talks intensified fears that the country could be the first to exit the euro zone.  The European Central Bank froze funding to Greek banks, forcing Athens to shut banks for a week to keep them from collapsing.

Interest Rates

 Benchmark Bond Yields

Greece's last-minute overtures to international creditors for financial aid on Tuesday were not enough to save the country from becoming the first developed economy to default on a loan with the International Monetary Fund.  The IMF confirmed that Greece had not made its scheduled 1.6 billion euro loan repayment to the fund. As a result, IMF Managing Director Christine Lagarde will report to the global lender's board that Greece is "in arrears," the official euphemism for default.  Fears of a Greek default have unnerved financial markets on concerns that it would ultimately lead to the country's exit from the euro common currency. The fate of Greece's membership in the 19-nation currency bloc still hangs in the balance ahead of a referendum on Sunday when Greek citizens will vote on whether to accept the austerity terms of continued international aid.

Activity in China's factory sector expanded slightly in June though not as much as expected, while growth in the services sector sped up, official surveys showed, offering some signs that the world's second-largest economy may be starting to slowly level out after a raft of support measures.  Beijing has rolled out a flurry of steps since last year, including interest rate cuts and more infrastructure spending, but analysts remain wary about the outlook given the still-weak property market, erratic global demand for China's exports and fears of a collapse in its wild stock market.

Britain's economy enjoyed a stronger start to the year than previously thought, buoyed by big-spending consumers and an upturn in business investment, but weak exports continued to act as a drag on growth.  New official data on Tuesday showed that over the past year, British households have seen a bigger boost to disposable income than at any time since 2001, as wages started to pick up and inflation fell toward its lowest in more than 50 years.  But export growth slowed, imports rose and poor returns on foreign investments caused Britain to run a far bigger current account deficit with the rest of the world than economists had forecast, barely narrowing from the record level seen in 2014.

Forex

Global foreign exchange reserves fell in the first quarter of 2015, extending a trend that started in third quarter of last year, and the euro's share hit a 13-year low as Asian central banks stepped up sales. Data from the International Monetary Fund showed global foreign exchange reserves fell to $11.433 trillion in the first quarter of 2015, from $11.589 trillion in the fourth quarter of 2014. The total amount of allocated foreign exchange holdings shrank to $6.062 trillion from $6.086 trillion in the prior quarter.  The value of euros held in allocated or known global foreign exchange reserves fell to $1.256 trillion from $1.343 trillion.

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