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(Bloomberg) -- USD/INR 1-month NDF rises as much as 0.7% to 67.88, highest since June 2.

• Currently trades +0.4% at 67.68
• Resistance: 67.93, June 1 high; 68.20, May 24 high
• Support: 67.36, 10-DMA; 67.16, 55-DMA
• Spot USD/INR closed on June 17 at 67.0850, down 0.3%
• NOTE: Rajan poses double India stress test

(Bloomberg) -- Preliminary Danish FSA probe shows the worst affected Danish banks exposure was “ten or less” client relationships, FSA Director Jesper Berg told reporters in Copenhagen.

• Denmark willing to increase FSA powers, look into size of fines, resources to increase inspections on money laundering, Business Minister Troels Lund Poulsen told reporters
• NOTE: Danish FSA Demands More Info From Banks on Panama Papers
• NOTE: Denmark Mulls Bank Fine Review After Nordea Reported to Police

(Bloomberg) -- St. Louis Fed Pres. James Bullard’s views on monetary policy, released in paper Fri., generate debate on significance of Fed’s rate forecasts; some economists refer to Fed’s dots as absurd, confusing and frustrating; Ambrosino Brothers Senior VP Todd Colvin says Bullard has had a “come to Jesus moment.”

• Bullard came forward as the Fed official who saw just one hike in 2016, no moves in 2017-2018, and declined to give a long-run rate projection; below is reaction from economists

• Barclays (Rob Martin)
  • Bullard’s view won’t be enough to pull rest of FOMC
  • Paper released Fri. by Bullard suggests “there’s a lot of uncertainty”
  • He’s “still trying to find his way forward”
  • Story link

• FTN (Chris Low)
  • Rest of FOMC “will gravitate toward Bullard if history is any guide”
  • Dots have fallen steadily since they were first published
  • Story link

• Jefferies (Thomas Simons)
  • Bullard opens debate on dots; that isn’t a “bad idea”
  • Dots creating “a lot more confusion and frustration than effective communication would”
  • Story link

• Northern Trust (Carl Tannenbaum)
  • Bullard’s position is “outlier,” shouldn’t impact mainstream view at Fed
  • Hard to figure out what led to such shift
  • Bullard’s new approach to forecasts represents “significant” reevaluation of how monetary policy ought to react to economic activity
  • Story link

• RBC (Tom Porcelli, Jacob Oubina, Michael Cloherty)
  • Bullard’s statement is testament to “absurdity” of Fed’s dots, and “protest” against using them as a policy tool
  • “In that regard, we could not agree more”
  • Story link

• TD (Millan Mulraine)
  • Bullard’s view reflects greater acceptance at Fed of U.S. economy’s structural headwinds
  • He made “fairly cogent” argument; U.S. economy may be stuck in “some variation of secular stagnation” and a “bad equilibrium”
  • Story link

(Bloomberg) -- With less than a week to go before the result of the U.K.’s EU referendum, currency volatility is surging while that in rates, stocks and inflation markets have only recently picked up as investors position for what could be the year’s biggest event risk.

• With recent polls skewing toward a “leave” vote, uncertainty is running high and liquidity is disappearing from markets, Bloomberg strategists Tanvir Sandhu and Vassilis Karamanis write
• Here’s a summary of cross-asset volatility trends ahead of the Brexit vote (all levels as of ~4pm BST on Friday):

CURRENCIES

• Liquidity in currency options has dwindled as most major banks are unwilling to quote bid-offer spreads in the front- end unless it suits their own risk profile, creating large distortions
• Implied volatility term structure in GBP/USD has hit its most inverted skew ever
  • One-week soared Friday by as much as 29 vols to all time- high of 49.7%, before retreating to 33.46%
  • Spread versus EUR/USD vol surges initially to record high ~30 vols, then pares gain to trade at 15 vols
    • Previous high was 8.25 vols in Sept. 2014 ahead of the Scottish referendum
• One-month in cable drops a 3rd day as demand for protection further down the curve wanes; trades at 25 vols, compared to 29.5 vols on June 15
  • 1-mo., 1-yr skew flattens to 13% from 16.1% record seen on June 13 and may drop further as referendum nears
• Risk reversal spread between 1-mo. and 6-mo. narrows from its all-time-low last Friday at -4.5 vols to -3.98 currently
  • Since June 2009, it turned negative only in Sept. 2014, before reversing to positive territory after Scottish vote

RATES, INFLATION

• Sterling long-expiry rate volatility finally woke up to Brexit risks as polls skew toward a “leave” vote, although it still remains below past year’s highs
• Term structure of 10y tenor GBP swaption volatility has now turned negative for 2m expiry vs 1y while it is near zero for 3m vs 1y (see chart here), sluggishly attempting to narrow the gap with deeply inverted FX counterparts
  • GBP 1y10y implied vol vs USD has now hit the highest level since at least 2011 however, the absolute GBP rate vol still remains below YTD high of 90bp/annual
• Steepening of bund volatility skew in favor of calls reflects increasing Brexit risk premiums and investors positioning for increased bond scarcity (see chart here)
• Downside options may come into play early in the coming week where any vote to “remain”, in line with betting odds, would see an unwind of Brexit premiums in bunds and renewed Fed hawkishness weighing on global bonds
• Growing risk of Brexit has rekindled GBP inflation vols amid surging cost of protecting against pound’s downside, with lure of relative value pushing up inflation premiums from trough
  • Any perception of GBP weakness due to increased odds of the U.K. leaving the EU could push up price pressures in the economy
  • The premium demanded to bet RPI will rise to 2% in 2 years has risen to 156bps from all-time low of ~57bps (see chart here); more here

EQUITIES

• S&P 500 has only recently started pricing in Brexit risks with the term structure spread between 1-month and 1-week volatilities approaching multi-year highs
• A kink has formed in the chart of weekly options expiring post EU referendum; see chart here
• FTSE vs SPX 1-mo. implied volatility spread has widened to 15 vol points, most since 2008; see chart here
• VStoxx-VIX spread is the widest in more than a decade after recent polls showed a lead for the “leave” campaign
• U.K. equity funds saw the past decade’s 2nd largest weekly outflow of USD1.1b in the period to June 15; 19 straight weeks of outflows from European equity funds: BofAML

• NOTE: Tanvir Sandhu and Vassilis Karamanis are strategists who write for Bloomberg. The observations they make are their own and are not intended as investment advice