Today's Headlines

Bloomberg:    

• Greece Defers IMF Payment as Merkel Warns Crisis Far From Over. Greece became the first country to defer a payment to the International Monetary Fund since the 1980s as its game of brinkmanship with creditors goes down to the wire. With Prime Minister Alexis Tsipras getting ready to address parliament on Friday after receiving a list of creditors’ demands, the step underscores the state of the country’s shriveling finances. While international officials have reported some progress in recent days, German Chancellor Angela Merkel said “we’re still far from reaching a conclusion.”
• Germany Warns of Eastern Ukraine Escalation Risk After Clashes. Germany warned that the conflict in Ukraine was at risk of spinning out of control after a pickup in fighting on Wednesday resulted in the biggest clashes in three months. Fighting subsided after the country’s military said it repelled an attack by as many as 1,000 pro-Russian separatists on the Donetsk-region town of Maryinka. Five Ukrainian soldiers were killed and 39 wounded during the past 24 hours, Yuriy Biryukov, a military adviser to President Petro Poroshenko, said on Facebook on Thursday. The ruble continued to drop.
• Bombings Hit Saudi Fault Line as Islamic State Widens War. Waist-high concrete barriers are being installed around the Al-Anoud mosque in eastern Saudi Arabia, and young Shiite men in yellow vests search worshipers arriving for midday prayers. The asphalt outside is still charred from the suicide bomb that killed four people there last week. “We’re trying to make people safe,” said Ahmed Hafeef, a 21-year-old member of the security committee that’s sprung up as locals seek to prevent a repeat attack. “After what happened, there are many volunteers.”
• Bond Rout Wipes Out 2015 Gains as Traders Stay Glued to Screens. The global bond market selloff has erased all of this year’s gains as historic market moves from Germany to the U.S. and Japan whipsaw traders. After being up as much as 2.3 percent as of mid-April, the Bank of America Merrill Lynch Global Broad Market Index of bonds with a total face value of $41 trillion is now down 0.4 percent for the year. Bond traders have been caught off guard by signs the worldwide economy is likely to avoid mass deflation and by improvement in the euro zone’s economy, leaving little incentive to own debt securities with yields that in some cases are below zero. Fixed income continued its slide on Thursday, a day after European Central Bank President Mario Draghi said investors should get used to the heightened volatility they’ve seen in recent weeks.
• GM(GM) Sales Slump Deepens in China Even After Discounts. General Motors Co. reported a second month of sales declines in China, its largest market, despite cutting prices on 40 models across its Buick, Chevrolet and Cadillac brands. GM and its China joint ventures sold 252,567 vehicles in May, a drop of 4 percent from a year earlier, according to a statement on its website. The decline was mainly due to a changeover and phasing out of older models, the company said.
• China Stocks Close Higher After Margin Curbs Spark 5.4% Rout. The ChiNext index of smaller companies fell 1 percent, paring a drop of 7.2 percent. Golden Sun Securities Co. removed ChiNext stocks from its list of shares eligible for margin trading, citing the gauge’s recent gains and high price-to-earnings ratios.  
• Emerging-Market Stocks Slump Ninth Day as Greek Debt Talks Stall. Emerging-market stocks declined for a ninth day as Greece’s talks with creditors stalled and concern mounted that strengthening economies in developed nations will damp demand for riskier assets. The MSCI Emerging Markets Index fell 0.8 percent to 987.57 at 12:33 p.m. in New York, set for the longest losing streak since March.
• European Stocks Decline for Third Day Amid Greek Debt Impasse. (video) European stocks fell to the lowest level in almost a month after another round of talks failed to end a Greek debt stalemate. The Stoxx Europe 600 Index slipped 0.8 percent to 392.65 at the close of trading. It trimmed losses after the International Monetary Fund urged the Federal Reserve to postpone its rate increase expected this year until the first half of 2016. Stocks tumbled as much as 1.9 percent earlier as bonds slumped and Greek Prime Minister Alexis Tsipras rejected proposals by creditors to help unlock more aid. The country owes the IMF four payments this month, even as its euro region bailout expires. The ASE Index slid 1.3 percent, the most among western-European peers.
• Consumer Comfort in U.S. Falls to Lowest Level Since November.
  Consumer confidence in the U.S. slipped last week to a six-month low as views of the buying climate softened, indicating a re-acceleration in household spending may be slow to materialize. The Bloomberg Consumer Comfort Index fell to 40.5 in the seven days ended May 31 from 40.9 in the prior week. It marked the eighth straight week of declines, the longest such period since the survey began in 1985, after the index reached an almost eight-year high in April.

ZeroHedge:

• Hedge Funds Have Never Been Longer, Short Exposure 25% Less Than Before Last Market Peak. (graph)
• The Real Reason Why There Is No Bond Market Liquidity Left.
• Ukraine 'Mobilizes' Right Sector Neo-Nazis Amid Renewed Fighting; NATO Points Finger, Russia Responds.
• Overnight, In Chinese Stocks... (graph)
• What Does Credit "Know" About Payrolls? (graph)
• Spot The Very Odd One Out: "How Much Longer Can This Divergence Continue?" (graph)
• C-Suite Gamblers - The Real "Dumb Money" Inflating The Bubble. (graph)
• IMF Panics - Slashes US Growth Forecasts, Demands Fed Stay On Hold For Another Year.
• The Real Reason The US Economy Simply Won't Grow: Lowest Worker Productivity In 22 Years. (graph)
• Initial Jobless Claims Hover Near 42 Year Lows. (graph)
• Tsipras Sticks To "Red Line" Rhetoric Cornered By Party Radicals.

Reuters:

• EU, IMF Said to Make Demands Crossing Greek PM 'Red Lines'. EU, IMF demand Greece not roll back pension reform or make unilateral moves on labor issues, crossing Greek PM Tsipras's red lines, citing people familiar with the matter. EU/IMF creditors ask Athens for VAT hikes worth 1% of GDP, pension cuts worth 1% of GDP; ask Greece to save EUR800M by scrapping low-income pensioners' benefit through 2016.

Deutsche Presse-Agentur:

• Schaeuble Rejects More Debt Forgiveness for Greece. German Finance Minister Wolfgang Schaeuble says debt foregiveness for Greece would mean an expropriation of savers.