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Risk Adjusted Return Monitor Summary & Views Top Observations Model Portfolio Data & News

Table of Contents

Cross-Asset Foreign Exchange Fixed Income Equities Commodities

China SZCOMP USD/NOK Australia 3-Yr China SZCOMP Natural Gas

China 5-Yr Gov’t Bond NOK/SEK China 5-Yr Gov’t Bond Australia Jr Miners Soybeans

*Highlights the largest positive and negative risk-adjusted returns overnight.

Only Half a Day’s Work to Resume China’s 2007 Playbook…What We’re Watching To Start June

Afraid of Lower Volatility Coming; Watching EM-DM Growth Dynamics Closely The Real Reason for China’s Stock Market Rally WTI Crude Oil Global Data: PMI Manufacturing Summary Model Portfolio Update – May 29, 2015 COB: +0.43% WTD, +2.02% MTD, +2.65% YTD

Afraid of Lower Volatility Coming; Watching EM-DM Growth Dynamics Closely Here is what we are watching while we all wait for Friday’s OPEC meeting, the latest crunch payment to the IMF by Greece, and the monthly US employment data. As much as we would like to see some fireworks, we are more afraid that all of those turn out to be non-events and instead we just see a repeat of what happened last year – that is, US equity 30-day realized volatility last year in May dropped from ~10 to a low of 5.7 pre-July 4th holiday. It currently stands at ~10.3.

Risk-Adjusted Return Monitor

Summary & Views

1. The oil price. We went long on WTI last Wednesday.

2. The ECB’s attitude to any move higher in core/periphery yields, two-year break-even inflation expectations, and a stronger euro. It is clear that Mario Draghi does not want the euro above 1.14 and Janet Yellen does not want it below 1.07. That suggests the trade is elsewhere.

3. Any change in sentiment away from hostility towards Japan’s Ministry of Finance to more yen weakness due to lower inflation expectations. The professional community is not long Dollar-Yen (USD/JPY); all they have done is cover their short position.

4. The steepness of the US Treasury curve. Should the ISM manufacturing data be weak today, the steepening trend could be led by the front end rallying rather than back end weakening, which was the trade at the beginning of May. The weak regional surveys on aggregate suggest the risk to the national index is a sub-50 level today. If the data turns out to be “contractionary” it will be interesting to see how fast the word “recession” shows up in the narrative as the Q2 bounce back view will be further negated.

5. The Reserve Bank of Australia (RBA) and Reserve Bank of India (RBI) meeting overnight. We have no view on what either will decide to do.

6. The Brazilian COPOM meeting on Wednesday and the expectation is for another 50 bps interest rate hike. Note the poor performance by the Bovespa index, i.e. -9% decline from the high in early May with last Friday’s volume being the highest of the year.

7. Following South Korea’s very weak data export growth in North Asia looks sluggish. The EEM/SPY ratio is

-6.75% since the end of April as emerging markets underperform US equities.

8. Further weakness in the US transportation index (TRAN) and whether that matters to US equities. The reaction to the new high and further M&A in the Philadelphia Semiconductor Index (SOX), which has been one of the highest Sharpe ratio trades for years.

The Real Reason for China’s Stock Market Rally The Shanghai Stock Exchange Composite Index (SHCOMP) has bounced more than 9% from the intra-day low touched last Friday and it is now only 3% away from reaching a fresh cycle high. Put another way, only half of a day’s work is still needed to resume the 2007 blue print that we outlined in last Thursday’s edition of Sight Beyond Sight following the overnight correction. For those that missed that note, the most important point we made was that the characteristics of Thursday’s sell-off were vastly different from past events where billions of market value were wiped out and according to the 2007 playbook this was just a normal correction that is common enough in the context of the market trending higher. Here is an illustration of that.

So what turned prices higher once again? Yes, new month inflows by retail traders, constructive monthly PMI economic data, and comments by a top “think tank” in Asia that China’s bull market in equities is far from ending, are anecdotes to support the narrative just like tighter margin lending at brokerages, a reduction of ownership by the State in numerous financial firms, and large IPO issuance were the excuses for starting the correction last week. But this is really about the broader exercise underway in China – that is, local governments have begun converting their debt into something that is more sustainable in the long-term. The details of the plan are illustrated in the May 26th edition of Sight Beyond Sight but the main point was that it is a transformational shift. Why? Because it removes insolvency risk by extending the maturity of existing debt to longer-term bonds (at least 10-years) with significantly lower yields than the existing municipality loans. As way of background, the target is 1 trillion yuan of transfers from local government to banks. There have been ~134 billion yuan of municipal notes sold by five local authorities through public auctions in the last two weeks, and three more are set to issue 91.3 billion yuan of the debt this week. Here is how one looks:

Jiangsu province placed CNY33.9 billion in local-government bonds with the market Monday. The bonds were sold via book building in the morning and afternoon sessions. Coupon rates for the 3, 5, 7 and 10-year bonds sold in the morning session at 3.32%, 3.71%, 4.03% and 4.05%, respectively. The coupon rates were higher than 2.94%, 3.12%, 3.41% and 3.41% for Jiangsu's local-government bonds sold at auction last month. The bonds are being placed with banks that have outstanding loans with the Jiangsu government or government financing vehicles and the proceeds will be used to retire these loans. (Source: MNI)

Today, the local speculation is that policy makers are considering plans to as much as double the size of the “clean-up program” for weak local government finances.

So we are not even 1/5th of the way through on the first tranche and the market is already speculating that an even larger balance sheet transfer is forthcoming. We only imagine if it follows the same psychology as quantitative easing (QE) in the US, Japan or Europe in that the transfer takes multiple years. While there has been no confirmation from the State Council, we would note that the yield on the 10-year bond has risen ~25 basis points in a six-day streak as demand for sovereign notes has been hurt by the increase in municipal debt issuance. The key point here is that the expansion of this transformational program is already being discounted, at least to some degree in the fixed income markets. WTI Crude Oil Perhaps we are biased because we went long on WTI crude oil last Wednesday, but we find the lack of general commentary or observations following Friday’s release of the Baker Hughes rig count data noteworthy. See the below two illustrations – Baker Hughes Rig Count Oil & Gas (left chart) and Baker Hughes Rig Count Oil (right chart).

On the Baker Hughes Oil & Gas (BAKETOT) we noticed it was 875 and crossed below the 2009 low of 876. So how much more can the oil bears now expect? Our guess is very little. On the Baker Hughes Oil (BAKEOIL) most energy specialists expected the low of their range at 800 rigs versus the 646 now. This means that US production forecasts are likely to be downgraded even though it is broadly expected some rigs will come back online in the early third quarter. So rigs coming off line saw the 25th straight week of declines and the price of WTI finished Friday at the highest weekly closing level seen in the 25 weeks since December 5, 2014. That is pretty ironic.

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South Africa: South African stocks (JALSH Index) declined for a ninth day in the longest stretch of losses since September 1998. South African bonds have declined for four straight months, the longest monthly losing streak in more than two years. (Source: Bloomberg, Mark Cudmore) Platinum Weakness: Correlation to JALSH Index since May 1st very high; also Platinum -2% on average in

month of June post global financial crisis.

Notable Monthly PMI Manufacturing Observations: Contraction in new export orders steepest since data collection began (Indonesia) Growth of output sharpest since April 2007 (Spain) Manufacturing PMI reaches its highest level in more than four years (Italy)

US Growth: Recent high-frequency data have begun to improve along lines of projected GDP rebound in 2Q15 of 2.7% (Source: Citigroup) Eurodollar Trade of the Week: Last Thursday, $147 million worth of premium in long-dated straddles (~$2mm in vega risk) was bought in Eurodollar futures. A trader bought 10K of Sep16 (EDU6) 98.75 straddles, 15K of Jun18 (EDM8) 97.875 straddles, and 10K of Mar19 (EDH9) 97.625 straddles. The latter two straddles require a move in 3-month LIBOR in excess of 125 bps to turn a profit. Basically, somebody spent ~$150mm on 4-year options as a book overlay for an end of the world event or LIBOR explosion. US “Monthly” Statistics: Credit issuance, buybacks, & M&A remain inexorably linked… May: Highest monthly investment grade (IG) credit issuance. May: Highest US M&A activity (May 2015 $242B, May 2007 $226B, Jan 2000 $213B)

Top Observations

Chinese Growth: Surprise Index declined to record-low in May, could be bottom as market expectations adjust, reduce negative surprises (Source: Nomura) Chinese Equities: China preferred equity market (63%, Japan 25%); Shanghai Stock Exchange Composite Index (SHCOMP) bullish drivers monetary (40%) and Government 'put' (40%); SHCOMP level 5-6k (80%) and 10k (20%); rally to last 3-6 months (40%) or 1-2 years (30%). (Source: BAML client survey) Real estate manager in Shanghai says since May, ~70% potential buyers are profit takers from stock

market - Shanghai Securities News Brazilian Growth & Real (BRL): Model suggesting BRL over-sold, triggering short term, tactical long position to 3.12; Q1 GDP shrunk but worst yet to come. Descent more gradual, but eventual escape sluggish vs. in 2008; 2015 GDP forecast -2.0% (Source: BNP Paribas) India Growth: Few signs of sustained recovery. Keep FY16 GDP GVA growth at 7.5% (vs 7.2% in FY15). Some support from agriculture Gov’t expenditure (Kotak Securities); Cut FY16 GDP growth to 7.5% (6% in old series) from 7.7% (6.3%). Recovery should be back ended towards end-2015; While headline GDP rose 7.5% in Mar, Gross Value-Added slipped to 6.1% (5.2% in old series) (Source: BAML). Turning point: pace of earnings cuts has bottomed, moving from 5.5% to 2-3% (Source: Credit Suisse)

US Dollar & EM FX: Negative USD bias shifts to neutral. TRY, TWD, MXN shift to neutral from positive biases. Considerable lack of consensus (Source: State Street) Chinese Yuan (CNY): Stable CNY weakest link in impossible trinity of stable rates, FX, cap account liberalisation; see CNY 5-9% depreciation over 1 year horizon as internationalization, capital account liberalization; market determined FX. (Source: BAML) Japanese Equities: The Nikkei (NKY) and Topix (TPX) indices both closed higher for the 12 consecutive session. Japanese Yen (JPY): Given BOJ role in USD-JPY in past 2.5yrs, diminished prospects for stimulus suggests less fuel for further gains (Source: HSBC)

Has HSBC missed this data from Research Center for Economic and Social Risk? Their Hitosubashi Consumer Purchase Indices are worth looking at. LINK

Yen-Won (JPY/KRW): Higher JPY-KRW over medium-term given uncertain Bank of Japan (BOJ), stronger USD; KRW to weaken to 1160 (vs. ~1150 last price). (Source: Morgan Stanley) CFTC IMM FX Positioning: Two very noticeable observations. The short position in New Zealand Dollar (NZD) is larger than the euro (EUR).

The Yen position is flat. Only those who were short USD/JPY expecting weakness (i.e. Yen strengthen)

covered their position. Very few actually turned got long. Asia FX: Ahead of Fed, INR, PHP, CNY should outperform. THB, MYR, SGD are likely to underperform. Bearish IDR (Source: Deutsche Bank) Asia strategy: Thailand bond duration, receive front-end THB+KRW IRS, long Indonesia bonds (IDR hedged), sell SGD, short AUD-JPY (Source: BAML) South Korea Exports: May exports fell most since 2008 crisis, led by shipbuilding, petroleum, steel, chemical and automobile products. (Nomura); 5th consecutive monthly contraction, with pace of decline accelerating from Jan's -1% (BAML); Most regions remained sluggish, especially US -7.1%. (Citigroup).

Event Period Surv(M) Actual Prior Revised Exports YoY May -10.7% -10.9% -8.1% -8.0% Imports YoY May -16.7% -15.3% -17.8% --

US Interest Rates Trades of the Week: BAML: Recommend flatteners (5-30) heading into payrolls, the escalating Greek drama, a key Fed

meeting, and better Q2 data. BMO: Buy in May and through June Stay; Seasonal trends in rates are said to turn bullish after the May

refundings. Historically, the evidence is mixed. Citi: Favor holding long positions throughout June in the intermediate sector (5- to 7-year) on Bund

stabilization, energy prices downside risk, seasonally bullish period in third quarter. DB: Expect yields to grind lower with a flattening bias; for the near-term rates are still not going

anywhere fast, drumbeat for Fed hike to get louder. Goldman Asset Management: We are short US rates expecting stronger US data and the appropriate

reaction from Fed policy JPMorgan: We turn mildly bearish on Treasuries and recommend tactical shorts in the 5-year sector;

maintain 5/30 flatteners as the curve remains too steep relative to its fundamental drivers. MS: Be in 3/10 Steepeners as Data Will Disappoint; either term premiums [in the long end] need to

move higher or the market has to take Fed liftoff into 2016. US Interest Rates: We were pleased that CEO of the largest bank by market capitalization shares our view on the pace of interest rate hikes.

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UPDATESAsset Class Date Strategy T/S Start/Close PX Capital at Risk (USD)Foreign Exchange 26-May-15 Long USD/JPY - add S 122.0300$ 30,000,000$ Commodities 27-May-15 Long WTI Crude Oil (CLX5) Nov P48/C64.5 risk reversal - open T 1.0500$ 550,000$ Foreign Exchange 27-May-15 Long USD/CHF - close S 0.9501$ -$ *Source: Bloomberg, Rareview Macro. Capital at Risk (USD) Start Price.

Model Portfolio

CURRENT POSITIONSAsset Class Entry Date Strategy T/S Start/Avg PX Capital at Risk (USD)Foreign Exchange 05-Dec-14 Long USD/CHF 9/7/15 C1.05 S 110.314$ 142,112$ Foreign Exchange 05-Dec-14 Long USD/SGD 9/7/15 C1.40 S 57.2$ 366,579$ Foreign Exchange 15-Apr-15 Short USD/BRL 6-month NDF S 3.2144$ (30,963,841)$ Foreign Exchange 15-Apr-15 Long USD/JPY S 120.5050$ 61,831,481$ Foreign Exchange 15-Apr-15 Long USD/JPY 10/15/15 C125 T 72.0700$ 1,926,619$ Equities 05-Dec-14 Long WisdomTree Europe Hedged Equity Fund (HEDJ) S 60.13$ 30,644,589$ Equities 05-Dec-14 Short SPDR S&P 500 ETF Trust (SPY) S 207.79$ (30,252,886)$ Equities 13-Feb-15 Conversion: Long GOOG vs. 1/20/17 C600-P600 Synthetic Short S $ 0.00 DVD Forecast $ 14.99mm FundingEquities 08-May-15 Long SPDR S&P 500 ETF (SPY) 9/18/15 PS 200-185 & C230 T 2.6350$ 2,249,683$ Equities 30-Mar-15 Long iShares China Large-Cap ETF (FXI) 11/20/15 CS 50-60 T 0.23$ 2,567,291$ Equities 21-Apr-15 Long Apple Inc. (AAPL) T 126.9600$ 20,601,173$ Interest Rates 09-Mar-15 Short German Bund (RXU5) - roll 1 S 153.71$ $ (150,000) per 1 bpsInterest Rates 09-Mar-15 Long US 10-YR Treasuries (TYU5) - roll 1 S $ 127-05 $ 150,000 per 1 bpsInterest Rates 04-May-15 Long Eurodollar (EDZ5) 12/14/15 Put Spread 99.5-99.25 S 0.1200$ N/AInterest Rates 04-May-15 Short Eurodollar 3YR Mid-Curve Dec15 (3EZ5) 12/11/15 P97 S (0.1150)$ N/AInterest Rates 05-May-15 Long Euro - Bund Futures (RXQ5) 7/24/15 C159.5 T 0.3100$ 208,090$ Interest Rates 06-May-15 Short Eurodollar Jul15 (EDN5) T 99.6500$ $ (200,000) per 1 bpsInterest Rates 06-May-15 Long Eurodollar Mar16 (EDH6) S 99.1500$ $ 150,000 per 1 bpsCommodities 31-Dec-14 Long SPDR Gold Shares (GLD) 6/30/15 C150 S 0.30$ 17,673$ Commodities 31-Dec-14 Long Silver (SIN5) - roll 2 S 16.210$ 41,417,710$ Commodities 31-Dec-14 Short Gold (GCM5) - roll 2 S 1,206.20$ (19,744,040)$ Commodities 12-May-15 Long iShares Silver Trust (SLV) 10/16/15 C18 T 0.4300$ 342,463$ Commodities 27-May-15 Long WTI Crude Oil (CLX5) Nov P48/C64.5 risk reversal T 1.0500$ 1,108,500$ *Source: Bloomberg, Rareview Macro. Capital at Risk (USD) COB May 29, 2015.

CURRENT THEMESReturn Stream Strategy Strategic (S) Tactical (T)Directional/Counter-Trend Long US Dollar vs. Short Singapore Dollar, Japanese Yen XDirectional/Counter-Trend Long Chinese H-Share Equities XDirectional/Counter-Trend Long AAPL Capital Redeployment & Upside Margins/EPS Guidance XDirectional/Counter-Trend Long WTI Crude Oil - Second Half 2015 Recovery XRelative Value (Carry) Long Brazil Stabilization/Carry vs. Japan Easing XRelative Value Long European vs. Short US Equities Currency Hedged XRelative Value Short European vs. Long US Fixed Income XRelative Value June 2015 (T) vs. March 2016 (S) Pace of US Interest Rate Hikes X XTechnical/Mean Reversion Long Silver vs. Short Gold XIdiosyncratic US Equity - Google - Dividend Conversion Arbitrage XRisk Premium Extraction of US Interest Rate Risk Premium XPortfolio Overlay Long German Bund Call Option XPortfolio Overlay Long US Equity Volatility (via S&P 500 Strangle) X*Source: Rareview Macro.

WATCH LISTAsset Class Entry Date Strategy Return Stream Wake Up PriceEquities 05-Jan-15 Long Euro Stoxx 50 Index Dividend Futures (2017, DEDZ7) Risk Premium 102.00€ Credit 05-Jan-15 Long 5-Yr Credit Default Swap (CDS) on Brazil Portfolio Overlay 175-200 bps*Source: Rareview Macro.

RISK EXPOSURERisk Level % of Portfolio Asset Class Gross Exposure Net ExposureMedium 68.73% Equities 211,648,648$ 11,142,876$ Medium 55.80% Foreign Exchange (USD) 171,844,221$ 109,916,539$ High 0.21% Fixed Income (DV01) 650,000$ (50,000)$ Medium 21.61% Commodities 66,561,750$ 42,448,670$ Low 0.00% Credit (CS01) -$ -$ Low 0.00% Option Premium (<1-mo.) -$ Low 0.07% Option Premium (1-3-mo.) 225,763$ Medium 2.55% Option Premium (>3-mo.) 7,866,503$ *Source: Bloomberg, Rareview Macro. Options Delta Adjusted. Risk Exposure (USD) COB May 29, 2015.

Model Portfolio For important information, including past performance, our process, FAQs regarding how the model portfolio is administered, and disclaimers please click HERE. The portfolio illustrations referenced within this material are hypothetical. No actual investments have been implemented and any references to transactions, positions, gains, or loses with respect to the portfolio are hypothetical.

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UNITED KINGDOM - Markit Manufacturing PMI May: 52.0 vs. 52.5 exp vs. 51.8 prior - Manufacturing output rises on solid domestic demand - Consumer goods sector remains main growth pillar - Job creation slows further - Markit: “Expectations of a broad rebound in UK economic growth during the second quarter of the year are called into question by these readings. Manufacturing looks on course to act as a minor drag on the economy, as the sector is hit by a combination of the strong pound and weak business investment spending. The strength of sterling is serving a double-whammy for economic growth by constraining manufacturer’s export performance and also driving a surge in cheap imports. Where growth is being reported by manufacturers, this remains heavily dependent on the domestic market, and consumer demand in particular. The challenge therefore remains for the new government to take the necessary steps to revive manufacturing, boost investment spending and improve export competitiveness if any headway is to be made on achieving the long promised rebalancing of the UK economy. Manufacturer’s growth funk is also hurting job creation, with increases to payroll numbers easing to a near standstill in May.” EUROZONE - Markit Manufacturing PMI Final May: 52.2 vs. 52.3 exp vs. 52.3 prior - Eurozone manufacturing recovery continues in May - Input cost inflation accelerates - Markit: “The final PMI data came in slightly below the earlier flash estimate but nevertheless signalled that euro area manufacturers are enjoying their best spell of growth for a year. The survey data point to a quarterly rate of industrial growth of approximately 0.5%. This should help drive GDP higher in the second quarter, perhaps matching the 0.4% rise seen in the first three months of the year. The rate of growth is modest rather than spectacular, however, and there are clearly countries which continue to struggle. Weakness is centred in the region’s core, with France’s manufacturing sector still in decline and Germany only seeing very meagre growth. On the other hand, Spain and Italy appear to be staging strong recoveries, benefitting in particular from

PERFORMANCE UPDATEPortfolio Macro Strategy Start NAV End NAV2015 Year to Date Return 2.65% 300,000,000$ 307,948,328$ 2015 Month to Date Return 2.02% Net 7,948,328$ 2015 Week to Date Return 0.43%

2014 Year to Date Return 17.81% 113,160,023$ 133,310,565$ 2014 Sharpe Ratio 1.92 Net 20,150,542$

2013 Year to Date Return 13.16% 100,000,000$ 113,160,023$ 2013 Sharpe Ratio 2.73 Net 13,160,023$ *Source: Bloomberg, Rareview Macro. Performance COB May 29, 2015.

Data & News

impressive export performances. Such export gains point to improved competitiveness which bodes well for longer-term economic prospects. Manufacturers in France and Germany need to be mindful of such competition.” GERMANY - Markit/BME Manufacturing PMI Final May: 51.1 vs. 51.4 exp vs. 51.4 prior - PMI dips to three-month low as production growth slows further - Output and new orders rise at weakest rates in 2015 so far - Marginal employment growth maintained - Input costs inflation hits 37-month high - Markit: “Germany’s manufacturing upturn appears to be losing its legs again, according to the latest PMI results. While the data signalled an overall improvement in manufacturers’ operating conditions, output and new order growth were the weakest in 2015 so far. Mirroring the trend for production and new business, employment growth slowed to only a marginal pace, as companies grew more cautious about their workforce numbers in a weak demand environment. “Meanwhile, inflationary pressures intensified in May, with input costs rising at the strongest rate since April 2012. Anecdotal evidence attributed input price inflation to the weak euro (which increases the cost of imported goods) and a shortage of certain raw materials.” FRANCE - Markit Manufacturing PMI Final May: 49.4 vs. 49.3 exp vs. 49.3 prior (12 month high) - Output and new orders fall at slower rates - Input price inflation at 17-month high - Markit: “The downturn in French manufacturing eased during May, in a sign that the sector may be getting closer to stabilisation. Output, new orders and employment all fell at slower rates in the latest survey period. However, input and output prices headed in opposite directions, with the former rising at the sharpest rate in 17 months and the latter declining at the fastest pace since February, putting pressure on firms’ margins.” ITALY: - Markit Manufacturing PMI May: 54.8 vs. 53.5 exp vs. 53.8 prior (highest in over four years) - Survey shows accelerated growth in output, new business and employment - Strong upturn in new export business contributes to expansion - Input costs rise at fastest rate since March 2012 amid a weak euro - Markit: “Italy’s manufacturing sector is enjoying its best quarter of expansion since 2011. Output growth has accelerated in every month this year so far, and a further strong increase in new orders suggests production is set to remain on an upward trend throughout the summer. “A big part of the recent improvement has been the revival in new export growth, which in May hit the strongest for almost a year amid improved competitiveness abroad. However, the threat of rising costs, caused mainly by the euro’s depreciation, is now back on the radar. Domestic demand is unlikely strong enough to withstand significant factory gate price hikes, so manufacturers may have to absorb much of the burden of higher costs in order to sustain the current pace of expansion.” SPAIN - Markit Manufacturing PMI May: 55.8 vs. 54.5 exp vs. 54.2 prior (fastest rate of growth since April 2007) - Faster rises in output, new orders and employment - Cost inflation quickens, leading to increased charges - Stocks of both purchases and finished goods increase - Markit: “The latest PMI data show that the Spanish manufacturing sector is not only sustaining recovery during Q2, but growth seems to be accelerating. Both output and new orders rose at rates not seen since before the economic crisis began in 2007. There was further evidence of inflationary pressures returning to the sector as

input costs rose at the sharpest pace in more than two-and-a-half years, in part reflecting recent euro weakness.” SWITZERLAND - Credit Suisse Manufacturing PMI May: 49.4 vs. 47.8 exp vs. 47.9 prior; highest this year - Output declines to 51.7 vs. 52.9 prior NETHERLANDS - NEVI Netherlands Manufacturing PMI May: 55.5 vs. 54.0 prior (17-month high) - Output growth accelerates amid faster increase in new orders - Employment rises at sharpest rate since November 2013 - Input price inflation strongest in 17 months - Markit: “The acceleration in Dutch manufacturing sector growth momentum signalled by May’s PMI data raises the likelihood of a positive GDP outturn following the 0.4% expansion registered in Q1. Increasingly robust demand conditions supported the latest growth, with demand strong both domestically and abroad. SWEDEN - Swedbank/SILF Manufacturing PMI May: 54.8 vs. 55.3 exp vs. 55.7 prior - Orders drop to 55.9 vs. 59.1 prior - Production rises to 58.9 vs. 58.5 prior CZECH REPUBLIC - HSBC Manufacturing PMI May: 55.5 vs. 55.2 exp vs. 54.7 prior - Strongest rise in employment in over four years - Input price inflation hits 15-month high - HSBC: “The Czech manufacturing sector is on course for another quarter of strong growth, with the PMI regaining momentum in May on the back of faster new business growth and the best round of job creation in over four years. The PMI follows hot on the heels of the surprisingly strong GDP figures for the first quarter, where growth outpaced all other EU members, and suggests that a strong pace of expansion will be maintained in the second quarter. The latest survey data also pointed to growing inflationary pressures, albeit from a low base.” POLAND - HSBC Manufacturing PMI May: 52.4 vs. 53.5 exp vs. 54.0 prior - Weakest growth of output and new orders since October 2014; fourth consecutive decline - Output, new orders, exports, employment and purchasing all grow more slowly - Input prices broadly unchanged since April - HSBC: “Poland’s manufacturing economy suffered another loss of momentum in May, with the headline PMI falling for the fourth month in succession to the lowest since last October. The PMI data for the past two months – alongside with a much slower official rate of IP growth in April – suggest that industry will weigh on GDP growth in the second quarter following the better-than-expected expansion in the first three months of the year. Poland’s continued manufacturing expansion in the months ahead will partly depend on the eurozone’s nascent recovery gaining traction, and Germany’s performance in particular.” TURKEY - HSBC Manufacturing PMI May: 50.2 vs. 48.0 exp vs. 48.5 prior (first time above 50 since December) - Output and new orders fall at marginal rates; job creation maintained - Output price inflation accelerates to 14-month high

- HSBC: “May’s survey of Turkish manufacturers signaled a broad stabilization in business conditions. The rise in the PMI above 50.0 and further job creation were the main positive findings, while new orders and output fell at the slowest rates in 2015 so far. Inflationary pressures remained strong, however, linked to the weak lira. The most recent official data also show improvements, with business confidence reaching the highest since mid-2014 in May, and IP growing in March.” RUSSIA - HSBC Manufacturing PMI May: 47.6 vs. 48.5 exp vs. 48.9 prior - PMI signals further modest deterioration of operating conditions - Output falls following accelerated reduction in new work - Jobs cut amid signs of excess capacity - Inflation rates continue to fall - HSBC: The stuttering nature of Russia’s manufacturing sector continued in May, with a rather disappointing set of survey data. Output, new orders and employment were all down since the previous survey. However, the contraction remains primarily centred on the investment goods sector, while the ongoing trend towards price level stabilisation suggests the macroeconomic environment is showing some sign of improvement. This could, in time, help the manufacturing economy regain some lost ground over the coming months." INDIA - HSBC Manufacturing PMI May: 52.6 vs. 51.3 prior - PMI rises in May as growth of output and new orders strengthens - Manufacturing PMI at four-month high - Solid and quicker rise in incoming new work - Production expands at strongest rate in four months - HSBC: “PMI data signalled a further robust expansion of the Indian manufacturing economy in May. Both output and new order growth accelerated to four-month highs, whereas the rise in export orders lost traction. The outlook for the sector is, however, clouded by a stagnant jobs market as firms remain uncertain about the sustainability of the upturn. Input cost inflation ticked higher and output prices were raised in May, but inflation rates are nonetheless weak in the context of historical data. This indicates that further rate cuts are still on the horizon.” INDONESIA - HSBC Manufacturing PMI May: 47.1 vs. 46.7 prior - Buying levels drop at fastest pace in survey history amid falling new business - Purchasing activity decreases sharply - Eighth successive monthly reduction in incoming new work - Contraction in new export orders steepest since data collection began - HSBC: “The fact that May’s Indonesian Manufacturing PMI recorded slightly higher than in April provides little consolation to the fact that the index continues to indicate worsening business conditions across the sector. With output, new orders and employment remaining in contraction territory, there is nothing to suggest that manufacturing will turn the corner and stabilise anytime soon, placing greater pressure on policymakers to act quickly to stimulate growth. Moreover, a survey-record drop in purchasing activity highlights the extent to which demand has plummeted in recent months. Manufacturing therefore appears to be acting as an increasing drag on the economy, raising the risk of a deepening contraction of GDP in the second quarter.” TAIWAN - HSBC Manufacturing PMI May: 49.3 vs. 49.2 prior - PMI signals further deterioration in operating conditions

- Output contracts for second month in a row... - ...while total new business and new export work both decline at steeper rates - Companies continue to cut back their inventory holdings - HSBC: “May data pointed to a further loss of momentum in Taiwan’s manufacturing sector, with output declining for the second month in a row and new work falling at a faster rate. Data suggested that both domestic and international demand remained relatively muted, as a slowdown across a number of key export markets led to fewer new orders from abroad. VIETNAM - HSBC Manufacturing PMI May: 54.8 vs. 53.5 prior - Output rises sharply amid record growth of new work - Strong growth of output and new orders in May - Rate of job creation picks up - First rise in input prices in seven months - HSBC: “The Vietnamese manufacturing sector gained further momentum in May and growth rates are now the best we have seen in the four years of data collection so far. “Central to the recent success of firms in Vietnam has been their ability to secure new work in a competitive environment, and the recent 1% devaluation of the dong against the US dollar by the State Bank of Vietnam should help efforts to maintain international competitiveness. On the other hand, some firms did report a rise in costs as a result of the weaker currency, leading to a first rise in input prices in seven months.” CHINA - Manufacturing PMI May: 50.2 vs. 50.3 exp vs. 50.1 prior (third consecutive expansion) - Non-manufacturing PMI May: 53.2 vs. 53.4 prior (3-year low) -New Orders: 50.6 vs. 50.2 m/m - New Export Orders: 48.9 vs. 48.1 m/m - Output: 52.9 vs. 52.6 m/m - Backlog of orders: 44.7 vs. 43.8 m/m - Inventory of finished goods: 47.5 vs. 48.0 m/m - Inventory of raw materials: 48.2 vs. 48.2 m/m - Employment: 48.2 vs. 48.0 m/m - Input prices: 49.4 vs. 47.8 m/m JAPAN - Markit/JMMA Manufacturing PMI Final May: 50.9 vs. 50.9 prior - Operating conditions improve at Japanese manufacturers - Return to growth of both production and new orders - Input prices rise at weakest rate in nearly two and-a-half-years - Markit: “The latest PMI signalled an improvement in operating conditions in the Japanese manufacturing sector. Both growth in production and new orders resumed, having contracted in the previous survey period. According to survey participants a rise in client demand helped by new product launches and enhanced marketing strategies led to the latest increase in new work intakes. Subsequently, employment growth was sustained for the second straight month. SOUTH KOREA - HSBC Manufacturing PMI May: 47.8 vs. 48.8 prior (3rd consecutive contraction) - Headline PMI posts weakest reading in 21 months - Output and new orders fall further

- Employment levels decrease for second straight month - HSBC: “Latest data highlighted a faster rate of deterioration in operating conditions at South Korean manufacturers. Production declined at the quickest pace since August 2013, alongside a further fall in new orders. Subsequently, manufacturers shed workers for the second straight month, marking the fourth time in which employment levels have fallen in the past eight months. Meanwhile, new orders from abroad declined, amid reports of lower trade volumes, particularly from China.”

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