Greetings,

Let's begin with a few developments in the Eurozone.

1. The ECB balance sheet is approaching its 2012 peak - the central bank has been quite busy in May. The Eurozone's monetary base hit a new high.

Source: ECB

Source: ECB

2. The ECB action (above) combined with weak employment data out of the US sent the average yield on German government bonds below zero for the first time.

Source: @fastFT

3. German factory orders dropped sharply, missing expectations by a significant margin. Both foreign and domestic demand has weakened. 

Source: Statistisches Bundesamt

4. The short-term rate differential with the US suggests that the euro should weaken. However, the inflation-adjusted rate differential isn't as large. Combine that with a more dovish Fed and all the talk of the euro going to parity remains just talk - for now. 

Source: Statistisches Bundesamt

Switching to the UK, the latest Telegraph poll shows Brexit vote going "down to the wire".  

Source: The Telegraph, h/t @ttmygh

This poll continues to keep FX markets on the edge, raising the British pound implied volatility to new highs.

In the betting markets, the Brexit odds rose above 30%.

Source: @PredictWise

Separately, the UK's FX reserves have doubled since 2012. Would Brexit reverse this trend?

Source: ‏@joshdigga

In Japan, insurance firms and other institutions are aggressively shopping for foreign long-term securities with some yield.

Source: Capital Economics, ‏@joshdigga

Japanese firms are taking advantage of this tremendous demand, issuing record amounts of corporate bonds.

Source: ‏@GarfieldR1966

Turning to China, we discussed the divergence between the narrow and the broad money supply growth. Here is another way of looking at the situation: bank credit vs. M2 growth. It tells us that credit expansion is "staying" within the financial system (including shadow banking) - with less credit being avialable to the broader economy.