Global

Low Interest Rates Fuelling Global Financial Instability. Global interest rates are too low and pose a rapidly growing risk to financial stability and economic growth, the Bank for International Settlements said on Sunday. The central bankers' central bank said economic growth across the world is uneven, debt burdens in many areas are high and rising, and the explosion of credit growth shows financial imbalances are building up again. The Switzerland-based BIS said a major contributory factor has been the pursuit of "excessively low" interest rates in response to the 2007-08 global financial crisis and the deflation scare triggered by last year's plunge in global oil prices. But keeping rates anchored at these historic, ultra-low levels threatens to inflict "serious damage" on the financial system and exacerbate market volatility, as well as limiting policymakers' response to the next recession when it comes. (Reuters)

China-Backed Multilateral Bank to Take Concrete Shape This Week. One of China's biggest ever foreign policy successes will take concrete shape on Monday when delegates from 57 countries sign an agreement on the Asian Infrastructure Investment Bank (AIIB) in Beijing. The founding members of the China-backed AIIB will sign articles of agreement that decide each member's share and the bank's initial capital. Asian countries are expected to own up to 75% of the bank while European and other nations will own the remainder. The AIIB will begin with authorized capital of $50 billion, eventually to be raised to $100 billion. China is likely to hold a 25%-30% stake, while India will be the second-biggest shareholder with a possible 10%-15%. Japan and the United States are the most prominent nations not represented in the bank. China has said it has left the door open for them to join. (Reuters)

Asia

China Cuts Interest Rates to a Record Low After Stocks Slump. China’s central bank cut its benchmark lending rate to a record low and lowered reserve-requirement ratios for some lenders after stocks plunged. In the fourth reduction since November, the one-year lending rate will be reduced by 25 basis points to 4.85% effective June 28, the People’s Bank of China said on its website Saturday. The one-year deposit rate will fall by 25 basis points to 2%, while reserve ratios for some lenders including city commercial and rural commercial banks will be cut by 50 basis points, according to the statement. The easing follows the biggest two-week plunge in the stock market since December 1996 and a four-week rise in money-market rates as lenders hoard cash. (Bloomberg)

Japan May Industrial Output Down 2.2%. Japanese industrial output fell 2.2% month-on-month in, falling at the fastest pace in three months, government data showed on Monday.The fall was more than the median estimate for a 0.8% decline. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 1.5% in June and increase 0.6% in July, the data showed. The government lowered its assessment of industrial production, saying factory output is stagnating. (Reuters)

China's May Industrial Profits Edge Up 0.6% on Year. China's industrial profits edged up 0.6% in May from a year earlier, the National Bureau of Statistics said on Sunday, slowing from a 2.6% rise in April. The bureau said industrial firms still faced weak demand and falling prices, although recent interest rate cuts helped lower costs. April's rise in profits had been the first since last September. For the first five months of 2015, industrial profits were down 0.8% from a year earlier. Industrial firms made combined profits of 2.25 trillion yuan ($362.44 billion) in the January to May period. (Reuters)

South Korea Targets Tax Exemptions to Spur Overseas Investment. South Korea plans to offer up to 10 years of tax exemptions for overseas stock investment funds as part of measures to boost its capital outflow to tackle a record current account surplus, the finance ministry said on Monday. Taxes will be exempted on investment and evaluation gains and currency valuation income from investment in newly established funds that put more than 60% of assets in overseas stocks, the finance ministry said in a statement. Last year, South Korea posted a record $89.2 billion of current account surplus but capital outflows amounted to a net $72.5 billion, official data shows, putting upward pressure on the won and forcing the central bank to absorb the surplus. (Reuters)

Dismal Thai May Trade Numbers Show Economic Recovery Remains Elusive. Thailand reported poor trade numbers for May, showing that the country's long-sputtering growth engine still is not helping the struggling economy get on track. Exports, which equal more than 60% of the economy, fell 5.0% in May from a year earlier, the Commerce Ministry said on Friday, worse than the 2.9% drop forecasted. Imports collapsed 20.0%, their biggest fall on an annual basis since August 2009 and more than twice the forecasted decline. (Reuters)

USA

U.S. Consumer Sentiment Rises in June. U.S. consumer sentiment jumped in June, according to a survey released on Friday. The University of Michigan's final June reading on the overall index on consumer sentiment came in at 96.1, up sharply from 90.7 in May. It was higher than the survey's preliminary reading of 94.6. The final reading was the highest since January and topped the median forecast of 94.6 among economists polled. (Reuters)

Europe

Greece Imposes Capital Controls as Crisis Deepens. Greece moved to check the growing strains on its crippled financial system on Sunday, closing its banks and imposing capital controls. After bailout talks between the leftwing government and foreign lenders broke down at the weekend, the European Central Bank froze vital funding support to Greece's banks, leaving Athens with little choice but to shut down the banking system to prevent collapse. Banks are expected to be closed all next week, and there will be a daily 60 euro limit on cash withdrawals from cash machines, which will reopen on Tuesday. Prime Minister Alexis Tsipras earlier on Saturday rejected the demands of lenders and called a bailout referendum. (Reuters)

Italy Employers Raise Growth Outlook. Italy economy will post a modest recovery this year after three years of contraction and growth will accelerate in 2016, employers' lobby Confindustria said on Friday. It its twice-yearly economic report Confindustria hiked its 2015 growth projection to 0.8% from 0.5% and raised next year's outlook to 1.4% from 1.1%. The new forecasts are broadly in line with those of Matteo Renzi's center-left government. However, Confindustria warned that the improved outlook was due overwhelmingly to external factors such as ECB monetary stimulus, low oil prices and euro depreciation, while Italy's economy remained fundamentally uncompetitive. (Reuters)

French Consumer Confidence Steady in June at Four-Year High. French consumer confidence was stable in June at 94 for the third month in a row at the highest level since November 2010, the official INSEE statistics agency said on Friday..INSEE's monthly consumer confidence survey found that households' outlook for their standard of living was the highest since October 2007, before the global financial crisis erupted. The number of households to tell INSEE that it was a good time to make big purchases also rose, which bodes well for consumer spending. (Reuters)

Currencies

Euro Slumps, Looming Greek Default Prompts Risk Selling. Euro exchange rates fell in Asia early on Monday after Greece failed to strike a deal with its international lenders to secure more emergency funding at the weekend, forcing it to introduce capital controls and keep its banks shut. The euro fell nearly 2 U.S. cents to a one-month low around $1.0990 in early Asia Pacific trade, from around $1.1165 late on Friday. Against the Swiss franc, the euro fell to around 1.0260 francs, its weakest level since late April, while it plumbed a one-month low around 134.90 yen as investors piled into safe haven Swiss and Japanese currencies. The dollar fell to a one-week low of 122.55 yen. (Reuters)

Commodities

Oil Near Flat, Brent Up Modestly after Two-Day Drop. Crude futures ended little changed on Friday as Iran faced continued difficulty in securing an nuclear agreement to end sanctions on its oil exports. Brent rose modestly after falling for two straight days. But U.S. crude extended its downside after indications that the country's oil rig count, a measure for future production, may start rising soon. A suicide bombing by Islamic State militants in Kuwait raised fears about the security of Middle East oil supplies and lent some support to crude. Brent settled up 6 cents, or 0.1%, at $63.26 a barrel. For the week, it rose 0.3%. U.S. crude settled down 7 cents, or 0.1%, at $59.63. It was down similarly for the week. (Reuters)

Gold Bounces from 3-Week Low. Gold was little changed on Friday, after falling to a three-week low, on short-covering at the end of the week and caution ahead of crunch talks on Greece this weekend, while concerns over the longer-term outlook for the metal provided price pressure. Spot gold was down 0.1% at $1,171.55 an ounce at 1407 GMT, after falling to $1,168.25, its lowest since June 5. Silver was down 0.6% at $15.77 an ounce, having briefly touched a three-month low of $15.50. Platinum was down 0.5% at $1,075.99 an ounce, while palladium was up 0.1% at $678.22 an ounce. (Reuters)