European stocks turned higher at 4:30am after the UK reported an unexpected rise in IP for May (yes somewhat dated and the beat was due in part to an extra day in the month as a day off was moved to June from May) m/o/m. IP in Italy, the Netherlands and Sweden in May also were above estimates but France’s was weaker. While it is yet to be determined what sovereign guarantee, if any, Spain will have to underwrite for the EU equity injections into Spanish banks, they at least will be given one extra yr to get its budget deficit below 3% as a % of GDP before getting financial penalties. Spain’s 10 yr yield is back below 7% in response. Most Asian markets traded lower after China said June imports rose just 6.3%, about half of what was expected. While exports were better, imports for China are usually the precursor to future exports. Imports and exports specifically to the EU region both fell y/o/y. In the US, the NFIB small business optimism index was not optimistic as it fell 3 pts to an 8 month low. After Fed President’s Williams and Lacker repeated their views on policy, non voting member Bullard today did the same and “doesn’t see need for QE3 at this time.”

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