We will start Monday's market wrap with the same reasoning we gave why on Friday everything started off neon green:

In what is perhaps the most glaring instance of central bank intervention yet, Reuters today captured the market mood as follows: "Calm ruled Europe's stock and currency markets on Friday as Greece inched closer to a default later this month....the euro was down just 0.3 percent against the dollar and major European stock markets gained in early trade." Why is Europe (and by extension US futures) so desperate to show green today even with a Greek default imminent? The same reason we explained back in January when we said the ECB and the Fed would do everything in their power to eliminate all Greek "negotiating" leverage which from day one was the attempt to create market contagion from Grexit. Unfortunately for Greece, the ECB's QE intervened and blew a hole right through its plans, and now, it finds that not only do markets not care about the Greek contagion about which even Janet Yellen warned, but in the US hit all time highs!

Well, today is Friday taken to the n^th degree, with the markets having already declared if not victory then the death of all Greek "contagion" leverage, following news that a new Greek proposal was sent yesterday (which as we summarized does not include any of the demanded by the Troika pension cuts), ignoring news that Greece had again sent Belgium the wrong proposal which the market has taken as a sign of capitulation by Tsipras, and as a result futures are surging higher by nearly 1%, the German DAX is up a whopping 3.1%, on track for the biggest one day gain in three years, Greek stocks up over 8%, German and US Treasurys sliding while Greek and peripheral bonds are surging (at last check Spanish paper was about 20 bps tighter than comparable US 10 year bonds because, well, fundamentals and stuff).

Another factor helping buoy sentiment is an unconfirmed report from Bloomberg that in an unprecedented move, the ECB boosted Greek ELA earlier today which would make it the third time in under a week, in a bid to keep insolvent Greek banks funded for a few more days if not hour even as the Greek bank run soaks up all the cash the ECB's ELA pumps in virtually the same day. This happens as Germany's Christian Social Union finance committee member Hans Michelbach and Social Democrat deputy parliamentary head Carsten Schneider said they want to stop Emergency Liquidity Assistance for Greek banks, according to a Spiegel interview with the politicians, according to whom the "ELA gives Greece more leeway to negotiate" and creates a "fiction of Greek banks’ solvency." Well yes, the whole point - not to mention the entire theater such as the photo below - is to kick the can if not months ahead then at least days and hours.

So yes, Greek optimism has again been the main driving force thus far in Europe with fixed income products lower and equities higher in the first half of the session. The upbeat tone has largely stemmed from reports that Greek PM Tsipras has submitted a further set of proposals ahead of today’s emergency summit which is due to commence at 1130BST/0530CDT. However, according to a senior Juncker aide, no emergency funds will be released at today’s meeting, with the aim to be to achieve a political understanding. Juncker also said no deal has been agreed yet on Greece and does not believe a deal will be done today.

Not helping things was Finland's finance minister Stubb who said he does not foresee a breakthrough today, saying he has "very low expectations for today" and that "It seems to be a Monday where we have wasted a lost of air miles, as finance ministers and European leaders."

Nonetheless, the upbeat weekend reports and news that the ECB have extended the ELA for Greek banks has seen Greek assets
outperform throughout the session with the ASE sharply higher (+8.3%) and Greek 2yr yield lower (-383bps),

Sentiment in Europe for stocks has also been underpinned by various stocks specific news with German automakers supported by a positive note from JP Morgan and weaker EUR, subsequently leading the DAX (+3.0%) to be on track for its best session in 3yrs with the Eurostoxx (+2.9%) seeing its largest daily gain since January. Telecom names have also been supported by reports that Altice and Numericable have made offers for Bouygues.

And while equity algos are testing and breaking all stops to the upside in FX it is a different story, and the EUR has somewhat bucked the trend by shedding its initial gains. Over the past month EUR/USD has continued to ebb higher amid hopes that at some point a deal will be struck between Greece and their creditors (momentum also helped by the FOMC inspired weaker USD), with CFTC data indicating an unwind of short EUR positions. However, now that it appears that a deal is within reach, an element of 'buy the rumour, sell the fact' appears to have crept into price action, with some participants also placing attention on comments from EU's Juncker who said he wants to see better management of the EUR by Brussels. Optimism has also seen an unwind of safe-haven positions, with the weaker CHF helping USD gain further ground against EUR.

In the commodity complex, gold has been dragged lower throughout the session by the unwind seen across safe-haven assets with the yellow metal looking to test its 50DMA to the downside at USD 1194.00. Palladium continues its recent decline, falling for the 8th consecutive day to break below USD 700 and reach its lowest level since February 2014, with ABN Amro suggesting prices could fall to USD 650, a further 10% by December. Elsewhere, WTI and Brent crude futures trade marginally higher with WTI back above USD 60/bbl as newsflow remains otherwise light.

So what will most likely happen vis-a-vis Greece again is no deal today, with the can kicked until the next summit later this week, and hopes that the Greek bank run shakes any remaining will to fight in the Syriza regime which will finally sign whatever proposal is present to it, or else suffer capital controls, a default, and so on. Pretty much everything we have seen for months on end.

To summarize: European shares remain higher though off intraday highs with the autos and telco sectors outperforming and basic resources, travel & leisure underperforming. Greek proposal given guarded welcome as leaders gather for talks. ECB said to raise Greek bank aid for third time in less than a week. The German and French markets are the best-performing larger bourses, U.K. the worst. The euro is little changed against the dollar. German 10yr bond yields rise; Greek yields  decline. Commodities gain, with natural gas, corn underperforming and WTI crude outperforming. U.S. Chicago Fed index, existing home sales due later.

Market Wrap

• S&P 500 futures up 0.8% to 2115.2
• Stoxx 600 up 1.9% to 392.9
• US 10Yr yield up 7bps to 2.33%
• German 10Yr yield up 10bps to 0.85%
• MSCI Asia Pacific up 0.9% to 148.5
• Gold spot down 0.5% to $1194.1/oz
• 94% of Stoxx 600 members gain, 5% decline
• Eurostoxx 50 +3.2%, FTSE 100 +1.2%, CAC 40 +3.2%, DAX +3.2%, IBEX +2.8%, FTSEMIB +2.3%, SMI +1.4%
• Asian stocks rise with the Sensex outperforming.
• MSCI Asia Pacific up 0.9% to 148.5
• Nikkei 225 up 1.3%, Hang Seng up 1.2%, Kospi up 0.4%, Shanghai Composite closed, ASX up 0.2%, Sensex up 1.5%
• Euro up 0.05% to $1.1358
• Dollar Index up 0.06% to 94.14
• Italian 10Yr yield down 12bps to 2.16%
• Spanish 10Yr yield down 12bps to 2.16%
• French 10Yr yield up 8bps to 1.24%
• S&P GSCI Index up 0.5% to 433.6
• Brent Futures up 0.9% to $63.6/bbl, WTI Futures up 0.9% to $60.2/bbl
• LME 3m Copper up 0.4% to $5683/MT
• LME 3m Nickel down 0.4% to $12665/MT
• Wheat futures up 0.7% to 496 USd/bu

Bulletin headline summary from Bloomberg and RanSuuawk

• Optimistic Greek reports lead stocks higher with the DAX on course for its best session in 3yrs (+3.0%)
• In FX markets, EUR bucks the trend in a 'buy the rumour, sell the fact' manner
• Looking ahead, all eyes will be on the negotiations between Greece and their creditors with the EU summit to begin at 1130BST/0530CDT
• Treasuries drop in overnight trading as latest proposal by Greek PM Tsipras drew a rare positive nod from EU officials who begin marathon talks today on Greece’s debt situation.
• The European Central Bank raised emergency funding for Greek lenders for the third time in less than a week, a person familiar with the decision said
• European Commission President Juncker wants the euro area to move toward creating a common treasury by 2025, according  to a report endorsed by ECB President Draghi and other senior officials
• As Greece teeters on the brink of crashing out of the monetary union, Europe’s single currency is headed for only its second monthly gain versus the dollar in a year
• European banks are better positioned to weather a Greek euro exit because their financial strength has improved in the past  three years, while funding markets are less likely to freeze, Moody’s Investors Service said
• European Union governments extended sanctions against Russia by six months to the end of January, to keep up the pressure on the Kremlin over eastern Ukraine
• Sovereign 10Y bond yields mixed, with Greece dropping 147bps; Portugal, Italy and Spain yields also lower. Asian, European  stocks gain, U.S. equity-index futures gain. Crude oil, copper, gold higher

US Event Calendar:

• 8:30am: Chicago Fed Nat Activity Index, May, est. 0.05 (prior -0.15)
• 10:00am: Existing Home Sales, May, est. 5.26m (prior 5.04m)
• Existing Home Sales m/m, May, est. 4.4% (prior -3.3%)

DB's Jim Reid completes the weekend and overnight event wraps:

It’s a new week but a similar theme as Greece is set to dominate today’s agenda ahead of the emergency EU Leaders Summit at 6pm GMT tonight. The meeting, however, is one which could go a long way to shaping the path that the saga takes from here. Any progress today is set to depend on the extent to which technical teams have had time to review a supposed new proposal offered by Athens yesterday, given that various European officials have made it clear that technical negotiations can’t take place at the summit and an agreement would therefore need to be reached ahead of it. In the mean time, Reuters have reported the Chief-of-Staff to EC President Juncker as saying that the latest Greek proposal is a ‘good basis for progress’. The details are unsurprisingly vague with suggestions that the Greek government has shown an indication for further concessions although it’s tough to say just how material these are versus the known gaps that exist between the two sides.

Ahead of the European open, the news of a proposal appears to have given a lift to markets in Asia this morning. Indeed the Nikkei (+0.88%), Hang Seng (+0.44%) and Kospi (+0.41%) are all up as we type. Markets in China today are closed for a public holiday. S&P 500 futures (+0.43%) are also pointing towards a positive start, while the Euro (+0.35%) appears to have been buoyed by the news of a Greek proposal. The optimistic start for risk assets appears to have fed over into the Treasury market where 10y yields are 3.2bps higher at 2.290%.

Back to Greece, over the weekend Greece PM Tsipras was said to have briefed German Chancellor Merkel, French President Hollande and the EC’s Juncker by phone on Sunday while a statement from Tsipras’s office said that the ‘PM has presented the three leaders Greece’s proposal for a mutually beneficial agreement that will give a definitive solution and not a postponement of addressing the problem’. Ahead of the Summit, Tsipras is expected to meet with the EC head Tusk, before then meeting Juncker, the ECB’s Draghi and the IMF’s Lagarde this morning at 11.30am GMT in an extraordinary Eurogroup meeting which looks set to discuss the proposals put forward and will likely set the tone for the Summit tonight. Meanwhile, this morning the ECB will hold another conference call at 9.30am GMT to once again discuss the liquidity situation for Greek banks. This comes after the ECB approved a €1.8bn increase in the ELA cap on Friday on the back of mounting deposit withdrawals. Reuters are reporting that Greek pre-orders for deposit withdrawals on Monday were said to have already reached €1bn.

In the latest Focus Europe piece published on Friday, our Economics colleagues noted that they continue to believe that the most likely outcome is that a deal will be reached. They suggest that this is the most rational outcome given that a Grexit would be costly for both sides and a deal is what Greek citizens want (according to opinion polls). They note however that in order for it to be sustainable, the deal needs to be a balanced compromise, although the path to which is perilous. Greek PM Tsipras needs to show the left wing of Syriza that he drove the bargaining process to the edge of the cliff, although pushing an agreement through the Greek parliament may entail the loss of the current coalition. They also suggest that in the case of a non-payment event, capped ELA and capital controls may yet be required to gain agreement on a sustainable, balanced compromise. It looks set to be a busy day ahead.

Recapping markets on Friday, it was another day of falling Treasury yields as the benchmark 10y ended 7.7bps lower in yield at 2.259%, the lowest close since June 1st with yields now 14bps off levels in the minutes just prior to the FOMC last week. With the yield curve bull flattening, the move lower was led at the long end with 30y yields down 8.2bps, while 2y and 5y yields ended 1.6bps and 5.4bps lower respectively. Further sharp moves in Fed Fund expectations continue to drive market direction as the Dec15 (-1.5bps), Dec16 (-5.0bps) and Dec17 (-6.5bps) contracts all saw yields fall for the fifth consecutive day. With the moves in rates, the Dollar pared most of its earlier gains with the Dollar index ending +0.05%. It was a softer day for US equities meanwhile as energy and financial stocks weighed on the S&P 500 (-0.53%) to bring to an end three consecutive days of gains. Oil markets fell with WTI (-1.39%) and Brent (-1.93%) both lower, while Gold ended -0.14%.

With no data on Friday in the US, there was some attention on the San Francisco Fed’s Williams who said that ‘my own forecast would be having us raise rates two times this year’ before reiterating that that would somewhat unsurprisingly ‘depend on the data’. There was a similar tone out of the Cleveland Fed President Mester who suggested that the Fed can withstand a ‘small rate increase’, although she acknowledged that she sees the argument of getting a little more confirming data as reasonable as well.

Equity markets in Europe appeared to trade with some optimism on Friday ahead of today’s summit. That tone did fade as the US session kicked in, however with the exception of the DAX (-0.54%) most equity markets finished up on the day including the Stoxx 600 (+0.36%), CAC (+0.25%), FTSE MIB (+1.07%) and the IBEX (+0.67%). Greek equities (+0.57%) also rose for the second consecutive day, although still suffered sharp declines over the week as the index finished the 5 days down 11.25%. Credit markets also had a decent session as Crossover in particular ended 16bps tighter. Bunds continued to remain well bid, with yields falling for the 6th time in the 7 sessions as the 10y ended 5.6bps lower at 0.752%. It was a better day for all bond markets in fact as 10y yields in Spain (-0.5bps), Italy (-1.2bps) and Portugal (-6.7bps) all fell, while Greek 10y yields ended 37bps lower.

There wasn’t much to report on the data front in Europe with just a slightly softer than expect German PPI reading for May (0.0% mom vs. +0.2% expected), while UK public sector net borrowing for the same month was slightly below market consensus (£10.1bn vs. £10.3bn expected). Elsewhere, the EC’s Juncker has suggested creating a common Treasury for the Euro area by 2025 in a so-called ‘five presidents’ report due to be released today. The report is also set to suggest a ‘shock absorption mechanism’ in a bid to help countries weather economic ups and downs as well as calling on the Euro area to complete its economic and monetary union ‘at the latest by 2025’.

Moving onto this week’s calendar now, it’s a reasonably quiet start to the week today data wise with just Euro area consumer confidence due. Over in the US however, we’ve got existing home sales data to look forward to as well as the Chicago Fed national activity index for May. All eyes will of course be on the EU Leaders Summit and Eurogroup meeting beforehand. We start Tuesday in Asia with the flash June manufacturing PMI’s for China and Japan. There’s more June flash PMI’s due in Europe on Tuesday with the manufacturing, services and composite readings due for the Euro area, Germany and France. French confidence indicators are also expected along with CBI trends for the UK. In the US on Tuesday focus will be on the important durable goods and capital goods prints. New home sales for May are also due along with the flash manufacturing PMI, FHFA house price index and Richmond Fed manufacturing index. Moving to Wednesday, we start with Japan PPI and small business confidence along with the China leading index print. In the European timezone, focus will be on French Q1 GDP and German IFO surveys for June. In the US we’ll get the third revision to Q1 GDP and core PCE. It’s a quiet start to Thursday with just German consumer confidence expected. There will be much focus on the US however with personal income and spending, PCE deflator, initial jobless claims, flash services and composite PMI’s and the Kansas City Fed manufacturing activity index all expected. On Friday we start in Japan with the May CPI print. Data flow in Europe consists of Euro area money supply and confidence indicators for Italy. In the US we end the week with the University of Michigan Consumer Sentiment print. Of course, Greece headlines are set to dominate much of the week while Fedspeak wise we’ve got Powell and George due.