The Wall Street Job Report

Europe Stocks Fall, Euro Erases Gain On Spain, Bank-Debt [Bloomberg] Treasuries rose and the euro traded at a 22-month low amid concern about Spain’s finances and plans that would force some investors to take losses on debt holdings at failing European banks. U.S. stocks fluctuated while Spanish and Italian bond yields rose. Rates on 10-year U.S. notes decreased three basis points to 1.75 percent at 11:23 a.m. in New York. The euro lost less than 0.1 percent to $1.2528 after dipping below $1.25 earlier for the first time since July 2010. The Standard & Poor’s 500 Index drifted between gains and losses near 1,322 after consumer confidence topped estimates, while the Stoxx Europe 600 Index rose 0.3 percent. Spanish 10-year yields added 15 basis points and Italy’s increased nine basis points.

Japan Core CPI Up For Third Straight Month [Nasdaq] Japan’s core consumer price index rose for the third straight month in April on the back of higher energy prices, presenting a cautiously hopeful sign in the country’s battle to emerge from years of debilitating deflation. Government data released Friday showed that core CPI increased 0.2% from a year earlier, compared with the median forecast for an gain of 0.1% in a poll of economists surveyed by Dow Jones Newswires and the Nikkei. In March, the index rose 0.2%. Motohisa Furukawa, Japan’s economy minister, said after the release of the data that the country’s long-running deflationary trend is gradually easing, though stressed that the government will keep a close watch on prices. “The price trend is becoming favorable,” Furukawa said. “But we cannot judge this only by looking at the consumer price index and I believe Japan remains in a modest deflationary trend.”

Merkel May Be Persuaded On Euro Debt-Sharing Compromise [Bloomberg] Chancellor Angela Merkel left the door open to a compromise on debt sharing in the euro area as Italian Prime Minister Mario Monti said he can help bring Germany around to acting in Europe’s “common good.” Merkel’s veto on allowing Germany to underwrite joint debt issuance in the 17-nation euro region is under fire from her international partners as well as the domestic opposition. While she refused to back joint euro-area bonds at a Brussels summit on May 23, Germany’s opposition parties wrung a concession from the chancellor on her return to Berlin yesterday to reconsider a separate proposal on common liability for sovereign debt.

Red Flag in Bank Lending? [TWSJ] Lending stumbled in the first quarter after nearly a year of growth, deepening questions about the recovery and confidence of borrowers and bankers. Loan balances fell by more than $56 billion, or 0.8%, in the quarter ended March 31, according to the Federal Deposit Insurance Corp. The quarter-over-quarter decline marks a reversal from three consecutive quarters in which lending expanded.

Breaking up Chase: Good For Shareholders and Taxpayers [CNNMoney] When I was a child, my sister and I loved watching the goings-on at a chicken farm near my grandmother’s house in rural Kansas. Chickens are interesting social animals, resembling, somewhat, the way we in Washington interact with one another. They were always on the lookout for one vulnerable bird that they would corner in the coop and then peck relentlessly on its head.

Analysis: Funds of Hedge Funds Fight To Stay Relevant [Reuters] For funds which market themselves on their ability to spot the sharpest hedge fund minds, it could be their greatest challenge yet. Investors who once trusted them to find the best returns are gaining the expertise and confidence to do it themselves. U.S. pension funds like the giant $240 billion California Public Employees Retirement System (CalPERS) have picked single hedge fund managers for years. Now smaller players are following suit.

Wall Street Lower Amid Greece Fears [MarketDay] Wall Street opened lower Friday as fresh warnings about Greece kept investors away from risky assets while trading was expected to be volatile and light throughout the day heading into a long weekend. Belgian deputy Prime Minister Didier Reynders issued a new warning over Greece, saying it would be a “grave professional error” if central banks and companies were not preparing for a Greek exit from the euro zone.

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