Market Commentary Key Notes: European Central Bank officials warned of catastrophic consequences if Greece is allowed to restructure its sovereign debt. German Chancellor Angela Merkel is also backing away from indications she was willing to accept a Greek debt restructuring. These comments supported the Euro. However, it is likely that the EU is only trying to put off an outcome that is only a matter of time and the current bounce in Euro could probably be a relief rally. Greece is weighed down with so much debt that debt restructuring seems to be the long term solution. Borrowing even more with no sign of improvement in ability of Greece to pay down debts does not make sense. Market Summary US: U.S. stocks showed a strong upward move during trading on Tuesday, adding to the gains posted in the previous session. The markets benefited from additional merger and acquisition activity as well as some upbeat Chinese trade data. Microsoft announced that it has agreed to acquire Internet communications company Skype for $8.5 billion in cash. Microsoft is acquiring the company from an investor group led by Silver Lake. The strength in the markets was also partly due to news that China reported an $11.4 billion trade surplus for the month of April compared to expectations for a much more modest surplus of $3.2 billion. China said its exports surged up by 29.9% year-over-year, reflecting strong global demand. The data has led to renewed confidence in the outlook for the global economy. Asia: Asian stocks rose due to improving earnings among Japanese companies. Sumitomo Heavy Industries Ltd. surged 12% in Tokyo after surpassing its full year profit forecast. Toshiba Corp. gained 3.7% after saying earnings will climb to a record. Denki Kagaku Kogyo K.K., a chemical products maker, soared 8% after saying it expects higher profit this fiscal year. Toyota Motor Corp., the world’s biggest carmaker, led gains in carmakers after the Nikkei newspaper reported its output may return to normal earlier than expected. China’s stocks rose as a jump in exports to a record bolstered confidence the world’s second-biggest economy can avoid a slump in growth. Yanzhou Coal Mining Co. led an advance for coal producers after the price of the fuel climbed and the nation’s exports exceeded economists’ expectation. Interest Rate: Yields on U.S treasuries 10-year notes fell as German Chancellor Angela Merkel said restructuring of Greece’s debt is not being considered. European Central Bank officials warned of catastrophic consequences if Greece is allowed to restructure its sovereign debt. German Chancellor Angela Merkel is also backing off from indications she was willing to accept a Greek debt restructuring. Currencies: The yen fell against U.S. dollar as signs the global economic recovery is picking up dampened demand for Japan’s currency as a refuge. China assured the U.S. that it will continue moving toward a more flexible Yuan exchange rate. Canada’s dollar rose against its U.S. counterpart as crude oil advanced. The pound weakened versus the dollar and the euro on speculation the Bank of England will lower its economic growth forecasts when it releases its inflation report, making higher interest rates less likely.

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