Forget About The Debt Ceiling Debate, Where’s The Economic Growth?
By Kevin Mahn, Forbes
It is my contention that the market has essentially priced in the belief that an agreement on raising the current debt ceiling will happen. It is just now a question of when the agreement will be finalized and what the length and terms of the finalized agreement will be. Unfortunately, the finalization of the agreement may not be enough to avert further consideration of a downgrade to the U.S. AAA credit rating by the rating agencies.
http://jlne.ws/q9r6Ab
St. Louis Fed’s Bullard Discusses Monetary Policy and U.S. Economy
Federal Reserve Bank of St. Louis
On Friday, Federal Reserve Bank of St. Louis President James Bullard delivered remarks titled “Views on the U.S. Economy: A Four-Part Story” as part of the keynote monetary policy discussion at the 3rd Annual Rocky Mountain Economic Summit in Jackson Hole. Bullard said that “monetary policy is on hold in an ultra-easy mode,” which is “an appropriate setting for monetary policy today.” Regarding the economic outlook, Bullard discussed why U.S. economic performance will likely improve in the second half of this year. He stated that three of the four key uncertainties that have plagued the U.S. economy since February have been largely or partially resolved, while one of them—the U.S. fiscal situation—is still on the table. “Once this last uncertainty is resolved, the path to faster growth may be open,” he said.
http://jlne.ws/pTFwu3
Remarks by the President on the Status of Debt Ceiling Negotiations | The White House
Good morning, everybody. I want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit. Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law...
http://jlne.ws/o6uuPt
Where does our national debt come from? | The White House
http://jlne.ws/qmeeVm
Treasury May Adopt ‘Risky’ Payment Plan as U.S. Deadline Nears
By Cheyenne Hopkins and Ian Katz, Bloomberg
The U.S. is approaching the moment it may have to decide which bills to pay, a prospect Treasury Secretary Timothy F. Geithner has called “unacceptably risky and unfair” to Americans.
http://jlne.ws/nLjST6
Economy in U.S. Grows Less Than Forecast
By Shobhana Chandra, Bloomberg
The U.S. economy grew less than forecast in the second quarter, after almost stalling at the start of the year, as consumers retrenched. Gross domestic product climbed at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, rose 0.1 percent.
http://jlne.ws/qsr0u7
U.S. House Bids to Salvage Boehner Debt Bill
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner plans to take his proposal to raise the U.S. debt ceiling to a vote in the chamber at about 6 p.m., Republican leaders announced.
http://jlne.ws/qypjvJ
DTCC Greatly Expands Historical CDS Data Available On Website
By Katy Burne Of DOW JONES NEWSWIRES
The Depository Trust & Clearing Corp. has expanded the suite of data it makes publicly available on credit default swap transactions, allowing interested parties to see weekly data going back to 2008. Until the change Tuesday night, buyers and sellers of CDS as well as market observers could see net notional values for the most recent week, the prior week, the month before the relevant date and for one year ago to that date.
http://jlne.ws/pKNeWs
Five questions for the Fed and Treasury
By Gillian Tett, Financial Times
This week, a cacophonous hubbub is overwhelming America’s airwaves. For with the debt ceiling deadline approaching, almost every pundit and politician worth their salt has been expressing views on what could – or should – happen next.
http://jlne.ws/rmBDO0
Citigroup, Goldman Commercial Mortgage Bond Traders Depart
By Sarah Mulholland and Donal Griffin, Bloomberg
The heads of commercial mortgage bond trading for Citigroup Inc. and Goldman Sachs Group Inc. have left the firms this week as the market is roiled by sovereign debt crises and new deals are cut back or put on hold.
http://jlne.ws/n2my3N
French Banks, Insurers to Lose $4.2 Billion in Greek Plan
BY WILLIAM HOROBIN, WSJ
PARIS—-The head of the French Banking Federation, François Perol, Friday said French banks and insurers will lose around E3 billion ($4.23 billion) by writing down the value of Greek bonds as part of the country's rescue plan, but said French financial institutions remain "solid" and have little exposure to Greece overall.
http://jlne.ws/pPFsDq
Moody’s puts Spain on review for downgrade
By Richard Milne in London and Sarah Mishkin in Hong Kong, Financial Times
Spain became the latest eurozone country to feel the pressure of credit rating agencies as Moody’s warned it was at risk of a one-notch downgrade. The move follows a similar warning to Italy in June and comes as the eurozone’s third and fourth biggest economies have endured a torrid time in the markets, as their borrowing costs shoot up.
http://jlne.ws/qobcZu
US default would spell turmoil for the repo market
By Darrell Duffie and Anil K Kashyap, Financial Times
Concerns are mounting that the US could default on its debt obligations if no agreement is reached on the country’s debt ceiling. But what exactly would be the consequences? The repo market would take a big hit for a start.
http://jlne.ws/nd22Ra
Goldman-Citi Offering Is Pulled Over Ratings
BY AL YOON, WSJ
Goldman Sachs Group Inc. and Citigroup Inc. pulled a $1.48 billion commercial mortgage-backed security from the market late Wednesday after an 11th-hour internal review by Standard & Poor's, throwing the CMBS world into disarray.
http://jlne.ws/rmYTVC
Investment banks hampered by high fixed costs
By Megan Murphy in London, Financial Times
European investment banks are being squeezed by fixed administrative expenses even as they slash pay and staff amid weak trading conditions. Credit Suisse on Thursday became the latest bank to announce significant job cuts, revealing it was shedding 4 per cent of its global headcount, about 2,000 employees, following a 52 per cent fall in net profits in the second quarter.
http://jlne.ws/psVNkv
Irish financial regulation to be strengthened
By Brooke Masters and Sharlene Goff in London, Financial Times
Ireland’s central bank would be given expanded powers to investigate the financial sector, direct institutions to change their business practice and fine or suspend those that misbehave, under a bill unveiled on Thursday.
http://jlne.ws/ndvuAQ
Jumat, 29 Juli 2011
Remarks By President Obama On The Status Of Debt Ceiling Negotiations
THE PRESIDENT: Good morning, everybody. I want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit.
Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law.
What’s clear now is that any solution to avoid default must be bipartisan. It must have the support of both parties that were sent here to represent the American people -– not just one faction. It will have to have the support of both the House and the Senate. And there are multiple ways to resolve this problem. Senator Reid, a Democrat, has introduced a plan in the Senate that contains cuts agreed upon by both parties.
Senator McConnell, a Republican, offered a solution that could get us through this. There are plenty of modifications we can make to either of these plans in order to get them passed through both the House and the Senate and would allow me to sign them into law. And today I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support -- that can get support from both parties in the House –- a plan that I can sign by Tuesday.
Now, keep in mind, this is not a situation where the two parties are miles apart. We’re in rough agreement about how much spending can be cut responsibly as a first step toward reducing our deficit. We agree on a process where the next step is a debate in the coming months on tax reform and entitlement reform –- and I’m ready and willing to have that debate. And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that too if it’s done in a smart and balanced way.
So there are plenty of ways out of this mess. But we are almost out of time. We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, as we always have -- bills that include monthly Social Security checks, veterans’ benefits and the government contracts we’ve signed with thousands of businesses. Keep in mind, if we don’t do that, if we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills -- we do -- but because we didn’t have a AAA political system to match our AAA credit rating.
And make no mistake -– for those who say they oppose tax increases on anyone, a lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans, their credit cards. And that’s inexcusable.
There are a lot of crises in the world that we can’t always predict or avoid -– hurricanes, earthquakes, tornadoes, terrorist attacks. This isn’t one of those crises. The power to solve this is in our hands. And on a day when we’ve been reminded how fragile the economy already is, this is one burden we can lift ourselves. We can end it with a simple vote –- a vote that Democrats and Republicans have been taking for decades, a vote that the leaders in Congress have taken for decades.
It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.
Now, on Monday night, I asked the American people to make their voice heard in this debate, and the response was overwhelming. So please, to all the American people, keep it up. If you want to see a bipartisan compromise -– a bill that can pass both houses of Congress and that I can sign -- let your members of Congress know. Make a phone call. Send an email. Tweet. Keep the pressure on Washington, and we can get past this.
And for my part, our administration will be continuing to work with Democrats and Republicans all weekend long until we find a solution. The time for putting party first is over. The time for compromise on behalf of the American people is now. And I am confident that we can solve this problem. I’m confident that we will solve this problem. For all the intrigue and all the drama that’s taking place on Capitol Hill right now, I’m confident that common sense and cooler heads will prevail.
But as I said earlier, we are now running out of time. It’s important for everybody to step up and show the leadership that the American people expect.
Thank you.
END
10:42 A.M. EDT
Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law.
What’s clear now is that any solution to avoid default must be bipartisan. It must have the support of both parties that were sent here to represent the American people -– not just one faction. It will have to have the support of both the House and the Senate. And there are multiple ways to resolve this problem. Senator Reid, a Democrat, has introduced a plan in the Senate that contains cuts agreed upon by both parties.
Senator McConnell, a Republican, offered a solution that could get us through this. There are plenty of modifications we can make to either of these plans in order to get them passed through both the House and the Senate and would allow me to sign them into law. And today I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support -- that can get support from both parties in the House –- a plan that I can sign by Tuesday.
Now, keep in mind, this is not a situation where the two parties are miles apart. We’re in rough agreement about how much spending can be cut responsibly as a first step toward reducing our deficit. We agree on a process where the next step is a debate in the coming months on tax reform and entitlement reform –- and I’m ready and willing to have that debate. And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that too if it’s done in a smart and balanced way.
So there are plenty of ways out of this mess. But we are almost out of time. We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, as we always have -- bills that include monthly Social Security checks, veterans’ benefits and the government contracts we’ve signed with thousands of businesses. Keep in mind, if we don’t do that, if we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills -- we do -- but because we didn’t have a AAA political system to match our AAA credit rating.
And make no mistake -– for those who say they oppose tax increases on anyone, a lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans, their credit cards. And that’s inexcusable.
There are a lot of crises in the world that we can’t always predict or avoid -– hurricanes, earthquakes, tornadoes, terrorist attacks. This isn’t one of those crises. The power to solve this is in our hands. And on a day when we’ve been reminded how fragile the economy already is, this is one burden we can lift ourselves. We can end it with a simple vote –- a vote that Democrats and Republicans have been taking for decades, a vote that the leaders in Congress have taken for decades.
It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.
Now, on Monday night, I asked the American people to make their voice heard in this debate, and the response was overwhelming. So please, to all the American people, keep it up. If you want to see a bipartisan compromise -– a bill that can pass both houses of Congress and that I can sign -- let your members of Congress know. Make a phone call. Send an email. Tweet. Keep the pressure on Washington, and we can get past this.
And for my part, our administration will be continuing to work with Democrats and Republicans all weekend long until we find a solution. The time for putting party first is over. The time for compromise on behalf of the American people is now. And I am confident that we can solve this problem. I’m confident that we will solve this problem. For all the intrigue and all the drama that’s taking place on Capitol Hill right now, I’m confident that common sense and cooler heads will prevail.
But as I said earlier, we are now running out of time. It’s important for everybody to step up and show the leadership that the American people expect.
Thank you.
END
10:42 A.M. EDT
Kamis, 28 Juli 2011
July 28, 2011: Debt-Crisis Vote Goes Down to Wire [NEWSLETTER]
July 28, 2011
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
MarketAxess Reports Second Quarter 2011 Record Revenues of $45.8 Million, Record Pre-Tax Income of $19.9 Million and Diluted EPS of $0.30
Press Release
NEW YORK, July 27, 2011 /PRNewswire/ -- MarketAxess Holdings Inc., the operator of an electronic trading platform for U.S. and European
high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the second quarter ended
June 30, 2011.
http://jlne.ws/oqu7Vq
Five Minutes With Richard M. McVey, Chief Executive Officer And Chairman Of The Board, MarketAxess
MarketAxess Holdings Inc. reported its second quarter earnings this week, and MarketAxess CEO and chairman Richard M. McVey told JLN Managing Editor
Christine Nielsen during a post-earnings call that credit trading conditions remain "very favorable." Investors are moving money as a result of the very steep
yield curve and, overall, the corporate bond market is active. He said the firm's healthy earnings were a sign of MarketAxess’ momentum in emerging market,
high yield and agency debt. As of late, MarketAxess has had a big focus on CDS and the technology solutions that will meet the criteria established by
Dodd-Frank.
Q: You recently released an enhanced institutional credit trading system. What does it offer that makes it significant?
A: The new enhancements to the platform were focused on adding CDS trading functionality. While CDS has been available on our platform for about five years,
with these enhancements we have significantly increased the flexibility of the platform. We now have two dealers - Credit Suisse and RBS - streaming live,
executable prices onto the MarketAxess platform for CDX and iTraxx. We are planning to add an additional six to eight dealers in the coming weeks.
The streaming markets provided by these dealers sit alongside our traditional request-for-quote (RFQ) auction-style protocol, giving customers greater pre-trade
price transparency, as well as flexibility in their means of execution. Now customers can view the live market prices even if they trade via an RFQ. We have also
increased post-trade functionality for trade affirmation and connectivity to clearing houses.
Q: Why was the system released at this point and time?
A: This technology release was originally timed to coincide with the mandated Dodd-Frank rule-making deadline, which was July 16th, 2011. However, despite
this deadline having been extended until the end of the year, we are still working closely with our dealer and buy-side customers to offer greater flexibility and
connectivity for electronic CDS trading. We are constantly making enhancements to our system, and although this was a major release for CDS, it won’t be
the last as we continuously look to improve our platform for CDS and other products.
Q: What sort of reception have you received so far to the system?
A: We’ve had very positive feedback from clients with respect to the new functionality. They feel that we have addressed many of their requirements for
execution and connectivity and we are consulting with them closely as we continue to make changes. In addition, many of the dealers in the U.S. and Europe
are also on board and looking to provide streaming prices to MarketAxess.
Q: Your firm has said that with this release, MarketAxess now has much of the core technology needed to meet the anticipated regulatory
requirements for registration as a swap execution facility (SEF) and security-based swap execution facility (SB SEF) under the Dodd-Frank Act in
the U.S. How so?
A: The new functionality is broadly in three key areas:
Pre-trade: Streaming, executable prices from dealers provide increased pre-trade price transparency. The platform now also offers the ability to designate a
clearing house and clearing member pre-trade. Execution: A variety of trading protocols - including RFQ and click-to-trade (streaming markets) available on the
same screen - increase flexibility for clients and address the anticipated regulatory requirements from both the CFTC and SEC. We have also added functionality
for single-name CDS as well as switches and rolls. Post-trade: We offer the ability to connect to available clearing houses, and enhanced functionality for trade affirmation.
Q: How does the MarketAxess offering compare with other firm offerings out there for institutional credit trading? How does this technology
position MarketAxess competitively speaking?
A: MarketAxess is the leading client to multi-dealer electronic platform for trading U.S. high grade and other fixed-income products including high yield,
agencies, emerging markets and Eurobonds. We currently have over 850 buy-side customers and 81 dealers live on our platform, and that number continues
to grow.
We think that our extensive buy-side client and dealer network for fixed income places us in a very strong position to be a key platform for electronic trading
of CDS.
Q: What will be the next steps that MarketAxess takes to prepare for Dodd-Frank? Will there be any other steps?
A: We are monitoring the progress of the Dodd-Frank rulemaking and will continue to develop our platform to respond to the regulatory requirements as they
are finalized. We do feel that we have a lot of the key functionality to comply with the rules as we currently understand them. Obviously, until the rules are final
we can’t be certain of exactly what will be required. We expect there may be additional changes needed, but for now we think we are in good shape.
Q: Is there anything that recent media reports haven't mentioned about MarketAxess that market users should know?
A: One trend that we’ve noticed is the concurrent increase in market share for our corporate bond business as discussions surrounding electronic trading in
the derivatives market have evolved. Our share of the U.S. high grade market has increased to 11.1% for this past quarter, up from 9.9% in Q1 2011, and 8.1%
a year ago. We believe that the continued focus on electronic trading as part of the broader conversation on market structure has encouraged dealers and
clients to look more closely at the ways in which they conduct their trading operations to maximize efficiency.
-- Christine Nielsen
Lead Stories
Debt-Crisis Vote Goes Down to Wire in House
BY NAFTALI BENDAVID AND CAROL E. LEE, WSJ.com
The House was headed for a cliffhanger vote Thursday on a revised debt plan from Republican Speaker John Boehner that could go a long way in determining
if the government's borrowing limit is raised in time to avoid a possible default next week.
http://jlne.ws/qH7lGq
U.S. debt crisis casts doubt on IMF power balance
How much each member of the IMF contributes to the organization is up for review in 2013 and countries like China, Brazil and India could be asked to
contribute more, given the serious fiscal difficulties of traditional large contributors, says a recent report.
http://jlne.ws/qu9vdz
Would a U.S. Credit Downgrade Matter?
BY DAVID WESSEL, WSJ.com
A prediction, widely shared in Washington and on Wall Street: One month from now, Congress will have lifted the federal debt ceiling, the U.S. government
will be paying its bills, the president will have signed a convoluted deficit-reduction law that defers decisions on benefits and taxes—and the
U.S. will have lost its AAA credit rating.
http://jlne.ws/oETsqp
Policymakers must reduce reliance on credit ratings
By Deven Sharma, Financial Times
What is the appropriate role of independent credit ratings in the financial system? That is the question raised by recent events in the eurozone and one
that has prompted a flurry of suggestions from European policymakers, from intervening in ratings methodologies to suspending certain sovereign ratings.
http://jlne.ws/n2YFlA
Republican debt plan faces close vote in Congress
By Andy Sullivan, Reuters
A bill to cut the deficit faced a nail-bitingly close vote in Congress on Thursday as the top Republican lawmaker sought to quell an internal revolt and
push his plan to avoid a ruinous default.
http://jlne.ws/r11ZVA
Debt ceiling debate risks double-dip recession
CNNMoney
Economists say the debt ceiling debate has already damaged the U.S. economy, and many worry that a deadlock could send the country hurtling into a
double-dip recession.
http://jlne.ws/p4xVUg
US debt limit: Rival plans unveiled as deadline nears
BBC News
Senate Democrats and House Republicans have unveiled competing plans to cut the US budget deficit and raise its debt limit to avoid a default.
http://jlne.ws/pO9KnJ
House Leaders Call for Short-Term Rise in Debt Ceiling
The New York Times
House Republicans intend to push for a vote this week on a two-step plan that would allow the federal debt limit to immediately rise by about $1 trillion
and tie a second increase next year to the ability of a new joint Congressional committee to produce more deficit reduction.
http://jlne.ws/oE30Lv
Boehner Fights Internal Strife Over Debt Plan
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt-ceiling standoff with President Barack Obama,
worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/pnXo3a
Companies Bracing for U.S. Default
BY KATE LINEBAUGH AND VIPAL MONGA, WSJ.com
The unthinkable is finally becoming reality for U.S. companies, who are beginning to take real steps to prepare for the possibility of a U.S. debt default.
While companies generally expect Washington to resolve the debt-ceiling impasse at the last moment, they are lining up extra sources of financing, and
carefully husbanding cash just in case a deal falls through.
http://jlne.ws/qHg9bw
Fed under fire over default talks
By Tom Braithwaite and Michael Mackenzie in New York and Robin Harding in Washington, Financial Times
Wall Street bankers, from senior executives to traders, are complaining that the Federal Reserve is refusing to engage in scenario planning for a US
downgrade or default. With days until the Treasury’s August 2 deadline to raise the debt ceiling, bankers say they are not getting a response to efforts to
discuss the market impact of a failure to reach a deal in Washington or if credit ratings agencies cut the US triple A rating.
http://jlne.ws/oLeraw
Chinese Officials ‘Appalled’ by U.S. Impasse: Roach
Senior Chinese officials are “appalled” by the impasse among U.S. politicians on raising the nation’s debt ceiling to avoid a default, said Stephen Roach,
non-executive chairman of Morgan Stanley Asia Ltd.
http://jlne.ws/qJGV2Z
U.S. Credit Swap Trading Soars 80% as Deadline Nears
By Abigail Moses, Bloomberg
Trading of credit-default swaps insuring U.S. Treasuries soared almost 80 percent as the deadline nears for plans to cut the nation’s budget deficit and
raise the $14.3 trillion debt limit to avoid default.
http://jlne.ws/oh9tPT
U.S. Contingency Plan Gives Bondholders Priority
Bloomberg
The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise
the debt ceiling, according to an administration official.
http://jlne.ws/pAoTTK
U.S. Credit Rating Rests On S&P’s London View of Washington
By Brian Faler, Bloomberg
David Beers may be the most influential political commentator in the U.S. right now, even though he’s hardly a household name,
that isn’t technically his job and he’s only visiting.
http://jlne.ws/pdi7T9
The debt ceiling deadline: The downgrade option
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt- ceiling standoff with President Barack Obama,
worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/rhtXhi
Why the credit rating agencies are keeping a close eye on the US
The Telegraph
The switchboard at Congress almost crashed on Tuesday as Americans voiced their anger at the stalemate in Washington over raising the country's
$14.3 trillion (£8 trillion) debt ceiling. Here is the verdict of the ratings agencies on the US debt problem.
http://jlne.ws/qbCkAA
Would a U.S. Credit Downgrade Matter?
BY DAVID WESSEL, WSJ.com
A prediction, widely shared in Washington and on Wall Street: One month from now, Congress will have lifted the federal debt ceiling, the U.S.
government will be paying its bills, the president will have signed a convoluted deficit-reduction law that defers decisions on benefits and taxes—and the
U.S. will have lost its AAA credit rating.
http://jlne.ws/oETsqp
Treasury May Have 3 Days To Fix A Default Before CDS Trigger
TeleTrader
If the U.S. fails to raise its borrowing limit by Aug. 2, when the Treasury Department says it will exhaust its supply of tricks to avoid defaulting on federal
debts, it may take a few days for the full shock wave to hit the credit-derivatives market. A panel of derivatives experts would likely declare a "credit
event," triggering payouts on $4.77 billion in credit-default swaps, or CDS, on U.S. Treasurys, should the government default on $90 billion of debt
maturing Aug. 4 and not make investors whole by the close of business Aug. 9, swaps executives told Dow Jones Newswires on Monday.
http://jlne.ws/nua9aX
S&P Stays Mum on Rating for U.S.
By JEAN EAGLESHAM And JEANNETTE NEUMANN, WSJ
Standard & Poor's Ratings Services left the threat of a downgrade hanging over the U.S., declining to tell anxious lawmakers on Wednesday whether
rival tax and spending plans floated in Washington would save the U.S.'s triple-A credit rating.
http://jlne.ws/qRjadG
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI And MARCUS WALKER, WSJ.com
European bond markets fell on Monday after Moody's Investors Service cut Greece's credit rating three notches deeper into junk territory, warning that
the country's latest bailout deal implies a default.
http://jlne.ws/ow2pJH
S and P sees 2nd Greek debt haircut, new downgrade
Reuters
A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor's said on
Tuesday, adding a further downgrade of Greece's sovereign debt rating was "pretty certain."
http://jlne.ws/pcoXxV
Banks stock up on cash amid US rating fear
By Justin Baer, Tom Braithwaite and Michael Mackenzie in New York
US banks are holding on to more cash and locking in longer-term financing as they brace themselves for the consequences of a potential downgrade of
the US’s triple A credit rating. Washington remains deadlocked over the nation’s budget, edging the US closer to a pivotal August 2 deadline to extend
its borrowing authority – and prompting financial institutions to plan for a set of scenarios that once seemed remote.
http://jlne.ws/r160Hj
Fitch downplays downgrade fallout
By Peter Schroeder, The Hill
A credit-rating agency said Wednesday that Treasury bonds likely would remain the gold standard for secure investments, even if Treasury’s reputation
were tarnished with a credit downgrade.
http://jlne.ws/pyfP1K
SEC Adopts New Short Form Criteria to Replace Credit Ratings
Press Release
Washington, D.C., July 26, 2011 – The Securities and Exchange Commission today voted unanimously to adopt new rules in light of the Dodd-Frank
Wall Street Reform and Consumer Protection Act to remove credit ratings as eligibility criteria for companies seeking to use “short form” registration
when registering securities for public sale.
http://jlne.ws/pPOaVA
Moody's Shakes Downgrade Stick at 177 Muni Issuers
By Mark Gongloff, WSJ.com
This isn’t all that unexpected, but it’s never fun to get the news: Moody’s has warned it could downgrade 177 muni issuers if the US loses its AAA rating.
http://jlne.ws/pw3Ihr
Moody's reaffirms Canada's triple-A rating
CBC News
Bond rating agency Moody's Investor Services is maintaining Canada's debt rating at triple-A, the highest possible. The firm said Thursday the AAA rating
was warranted, citing among other things, the country's "high degree of economic resiliency" and deficit-cutting efforts by the federal and provincial governments.
http://jlne.ws/nLKiYy
Moody’s Sees Benefits for Banks From Consumer Bureau
By BEN PROTESS, NY Times
The new Consumer Financial Protection Bureau has ignited fear on Wall Street. But many banks may eventually benefit from the regulator’s careful watch,
according to a new report by Moody’s Investors Service.
http://jlne.ws/oniyVd
**CN: Finally, some good news.
ISDA: CDS On US Sovereign Debt Q&A
Press Release
http://jlne.ws/orxxRa
Heading for a 'Haircut' in Repo Market
BY MATT PHILLIPS, BEN LEVISOHN AND SERENA NG, WSJ.com
The debt stalemate in Washington is creating stress in a little-known but vital corner of the bond market, increasing the risk that banks, hedge funds and
other investors will have to pay billions of dollars in additional costs if the U.S. defaults or is downgraded.
http://jlne.ws/mX3F3a
CME CEO Sees Migration From Swaps To Futures
By Jacob Bunge, Of DOW JONES NEWSWIRES
The top executive of CME Group Inc. (CME) said Thursday that investors are showing signs of embracing futures trading in place of more complex
swap products as stricter rules for such off-exchange derivatives loom on the horizon. A second-quarter surge in interest-rate-futures trading at CME got
a lift from anticipated regulations that will bring higher capital requirements for banks and evolving accounting standards, making the swaps market more
futures-like, said Craig Donohue, chief executive.
The 'Bond Vigilantes' and the Debt Ceiling Crisis: No Need to Panic or Lying in Wait?
PBS
Harvard's eminent trade economist, Robert Lawrence, gave a talk in Greece this month. Among his slides was this image with the headline: "The
Vigilantes are Asleep!" That would be the so-called "bond vigilantes" - the investors in the world's bounteous supply of IOUs, with specific reference to
the IOUs of the United States - our Treasuries (bonds, notes and bills).
http://jlne.ws/of3VMy
Treasury May Have 3 Days To Fix A Default Before CDS Trigger
By Katy Burne Of DOW JONES NEWSWIRES
If the U.S. fails to raise its borrowing limit by Aug. 2, when the Treasury Department says it will exhaust its supply of tricks to avoid defaulting on federal
debts, it may take a few days for the full shock wave to hit the credit-derivatives market.
http://jlne.ws/nua9aX
Cost To Insure Treasurys Sets Record As Debt Debate Drags On
By Katy Burne, DOW JONES NEWSWIRES
The cost to insure U.S. sovereign bonds against non-payment soared to a fresh record Wednesday as the debt-ceiling standoff in Washington continued
and the government moved inexorably closer to a potential debt default. The price of one-year protection sold in the form of derivatives called
credit-default swaps, or CDS, is now above the cost of five-year protection--a sign that confidence in the government reaching an eleventh-hour deal is
waning.
http://jlne.ws/oz4FK4
Infographic: Where America Spent All of Its Money
Forbes
The White House posted the following infographic on its website today explaining how America accumulated its national debt over the past decade,
shifting fiscal forecasts from projected surpluses to elephantine deficits.
http://jlne.ws/nGhoKb
Infographic on Dodd-Frank
Clarke Camper - Inside the Beltway
In the Atlantic, I just came across this chart by Deloitte that provides a fascinating visual representation of progress in implementing Dodd-Frank: Chart
of the Day: The Sluggishness of Financial Regulation.
http://jlne.ws/q70qOd
Collateral Rules Criticized
BY AARON LUCCHETTI, WSJ
Some lawmakers and financial firms are resisting rules being written to implement last year's Dodd-Frank law that could require banks to set aside more
collateral when they make certain trades in the derivatives market.
http://jlne.ws/q7Wd33
Inflation Expectations Matter
By Michael S. Derby, WSJ.com
An axiom of central banks these days holds that what consumers reckon future inflation will be is an important driver of prices now. Put another way, if
the public expects prices to rise in the future, inflation will start to rise now. So Federal Reserve officials have decided understanding, measuring and
controlling inflation expectations is a critical part of its mandate to keep inflation stable.
http://jlne.ws/mRKTA7
Free-marketeers and inflation: Missing Milton Friedman
The Economist
TIM LEE asks an important question: why are conservatives and libertarians so uniformly hawkish about inflation? Mr Lee (a friend and former
colleague) notes that this regularity is far from inevitable. Milton Friedman, a revered figure in right-of-centre circles, famously pinned the severity of the
Great Depression on contractionary monetary policy. Scott Sumner, a professor of economics at Bentley University who identifies himself as a
"neo-monetarist", has argued that Friedman would have supported monetary stimulus. And he has argued, on neo-Friedmanite grounds, that tight
monetary policy both precipitated and exacerbated our recent recession.
http://jlne.ws/rsSeJI
Gold hits record as U.S. debt talks grind on
By Claudia Assis and Virginia Harrison, MarketWatch
Gold futures traded in record territory Monday as U.S. debt-ceiling talks to avert a default continued, with little to indicate progress toward a deal, and
as a debt-ratings agency further downgraded Greece.
http://jlne.ws/qh0KOS
Beware of perceived safe havens
By Richard Milne, Financial Times
Risky assets do not cause crises. It is those perceived as being safe that do. Such a statement might sound counter-intuitive. However, it reveals much
about the current crisis as well as the recent past. The subprime crisis of 2007-08 was exacerbated by the fact that so many of the mortgage-backed
securities spewed out by banks were rated triple A. That meant they could essentially be considered “risk-free” for banks, when, of course, they were
anything but.
http://jlne.ws/nlVGFO
Fitch: U.S. Treasuries Expected To Remain Global Benchmark
http://jlne.ws/rjU1Jt
Global Commission Management Update: No Credit Too Small
Press Release
London, 21 July, 2011 – A new report from Aite Group examines the key trends that have developed in the commission management industry since the
2006 implementation of new regulation in the United States and U.K. The report also explores the adoption of commission management in the European
and Asian markets, and major commission management initiatives provided by full-service and agency brokers.
http://jlne.ws/oJ4dH7
Soros Returns Client Money to End Four-Decade Hedge-Fund Career
By Katherine Burton, Bloomberg
George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a
career as hedge-fund manager that spanned more than four decades.
http://jlne.ws/p82XB9
Events
Credit Risk in Emerging Markets
August 1, 2011
www.theIFM.org
Making Sense of Credit Default Swaps
August 10, 2011
www.theIFM.org
FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
Economic News
Growth slows as labor markets ‘soft’
By Steve Goldstein, MarketWatch
Soft labor markets and weak real estate offset a slight boost to consumer spending and an encouraging start to the tourism season, the Federal Reserve
reported Wednesday in its Beige Book of anecdotal evidence on the U.S. economy.
http://jlne.ws/pb3uhy
Beige Book: District-by-District Summary
http://jlne.ws/nSKHwM
German Inflation Rises
BY WILLIAM LAUNDER AND TODD BUELL, WSJ.com
Preliminary consumer-price inflation in Germany rose in July, exceeding economists' forecasts on higher energy prices, the German Federal statistics
office said Wednesday.
http://jlne.ws/nB00rU
Exchanges, Clearing Houses & MTFs
CME Globex Enhancements for Interest Rate Products
Press Release
Effective August 2011, a number of CME Globex enhancements for CBOT and CME Interest Rate futures products will be introduced. The changes to
our CBOT interest rate products will take place on Sunday, August 7, 2011 (trade date August 8) and to CME products on Sunday, August 21, 2011
(trade date August 22).
CME Group Collateral Haircuts
As per the normal review of market volatility to ensure adequate collateral coverage, CME Clearing will implement the following collateral haircuts
effective with the close of business on Thursday, July 28, 2011.
Asset class: TBILL Current haircut: 0.0% New haircut: 0.5% ...
http://jlne.ws/ovU2XH
Cost of Treasury futures set to rise
By Michael Mackenzie, Financial Times
The cost of trading US Treasury futures was set to rise on Monday, as the CME Group adopted defensive measures given the impasse in Washington over raising the Federal debt ceiling.
http://jlne.ws/ngGGtH
Tradeweb Launches Electronic European Repo Marketplace
PR Newswire
Tradeweb Markets LLC, a leader in building and operating financial markets, today announced the launch of a European repo marketplace. The
electronic dealer-to-customer platform mirrors the existing voice and message-based trading process, while enabling efficient trade execution and
substantially simplifying the post-trade complexities of collateral assignment and allocation.
http://jlne.ws/oaxxuO
Firms & Banks
HSBC may cut more than 10,000 jobs: report
Reuters
Banking group HSBC Holdings Plc may cut more than 10,000 jobs as part of its plan to slash costs by up to $3.5 billion a year, Sky News reported
Thursday.
http://jlne.ws/pCmvCG
RRP Eligibility Criteria: Banks and Savings Associations
Federal Reserve Bank of New York
This document sets forth the criteria for acceptance of a bank or savings association as a counterparty eligible to participate in reverse repurchase
transactions (RRP) with the Federal Reserve Bank of New York (FRBNY). FRBNY may engage in RRP, if at all, at the direction of the Federal Open
Market Committee (FOMC).
http://jlne.ws/oyytnC
Fed orders RBS to improve U.S. operations
By Glenn Somerville, Editing by Chizu Nomiyama, Reuters
The Federal Reserve on Wednesday ordered the Royal Bank of Scotland Group to develop a plan for improving oversight
of its U.S. operations and tightening its risk-management practices.
http://jlne.ws/qzALYn
Five Banks Have $6.8 Billion of Derivatives With Italy, EBA Says
Bloomberg
Five European banks have a total of 4.8 billion euros ($6.8 billion) of derivatives contracts with the Italian government, according to data released for the
first time by European regulators.
http://jlne.ws/oNruap
Investors Get Win In a Lehman Case
By Patrick Fitzgerald, Dow Jones
Britain's Supreme Court on Wednesday dismissed an appeal by units of Lehman Brothers Holdings Inc. and Bank of New York Mellon, a win for
investors in a high-stakes legal dispute involving complex derivatives transactions that has divided courts on both sides of the Atlantic. The U.K.'s
Supreme Court, the nation's highest, ruled unanimously in favor of investors represented by Australia's Belmont Park Investments over Lehman's
Specialty Finance unit -- the heart of the bank's derivatives business -- and BNY Corporate Trustee Services Ltd., now part of Bank of New York
Mellon, in a battle over so-called flip clauses in credit derivatives contracts. These provisions "flipped" the payment priority order when Lehman filed for
bankruptcy, allowing the investors to move ahead of the investment bank to grab assets backing the derivatives deals.
Goldman Sachs CMBS Trading Head Salem Said to Leave the Bank
By Sarah Mulholland and Jody Shenn, Bloomberg
Matthew Salem, head of commercial- mortgage bond trading at Goldman Sachs Group Inc., has left the bank, according to a person familiar with the
situation.
http://jlne.ws/p0pPFI
MF Global Hires Heads of Structured Mortgage, CMBS Trading
By Matthew Leising, Bloomberg
MF Global Holdings Ltd., the futures broker that’s transitioning into an investment bank, hired Christopher Belhumeur and Chris
Lau to expand trading in structured products and commercial-mortgage backed securities. Belhumeur, 40, previously co-head of agency collateralized
mortgage obligations and derivatives at Jefferies Group Inc., began yesterday as head of structured mortgage trading, said Tiffany Galvin, MF Global’s
spokeswoman. Lau, 38, who led Gleacher and Co.’s CMBS trading and started at MF Global last week, will assume that role for the company.
They will report to Jon Bass, global head of institutional sales and fixed income, Galvin said.
Deutsche Names Two as Co-CEOs
German Bank Will Pair Indian-Born Jain With German Head Fitschen; Ackermann Moves to Board
BY LAURA STEVENS - WSJ
Straddling its twin roles as a global investment-banking powerhouse and huge German lender, Deutsche Bank AG on Monday resolved months of
indecision over its leadership by appointing two top executives to succeed CEO Josef Ackermann.
http://jlne.ws/njOqpt
Deutsche Eyes Jain for Co-CEO Post
By LAURA STEVENS, WSJ.com
Anshu Jain, Deutsche Bank AG's Indian-born, London-based head of investment banking, looks set to take over as joint chief executive and become
the real power at Germany's most powerful bank, according to people familiar with the matter.
http://jlne.ws/nSJ1Gq
UBS to cut costs and rethink fixed income unit
Reuters
Switzerland's UBS will slash jobs and review the future of its fixed income business after the underperforming unit hit second-quarter profits and forced it to push
back targets.
http://jlne.ws/r0h71E
Goldman Succession May Be Hurdle for Cohn
By Max Abelson and Christine Harper, Bloomberg
Michael Ovitz, the former Hollywood agent whose company was said to have created enemies “the way a hurricane produces raindrops,” first met Gary
Cohn over lunch at Goldman Sachs Group Inc. (GS)’s headquarters in June 2009.
http://jlne.ws/pDmkXP
NCUA Gives Voice to Credit Unions as FSOC Releases First Emerging Risks Study
Matz Signs Attestation for FSOC Annual Report
ALEXANDRIA, Va. (July 26, 2011) – National Credit Union Administration (NCUA) Board Chairman Debbie Matz attested to Congress her
approval of the Financial Stability and Oversight Council’s (FSOC) annual report with recommendations. The FSOC released its first annual review of
emerging risks in the financial system today. During the past year, NCUA has worked with other regulators on the FSOC to implement the initiatives
mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act to restore integrity in the markets and strengthen the public’s trust in the financial
system. “Our combined FSOC activities, independent actions, and joint rulemakings are correcting many of the weaknesses laid bare by the
financial crisis,” said Matz at the FSOC’s July 18 meeting. “Together, on the FSOC, we have made significant progress in issuing a number of important
studies, proposed and final rules, and establishing a venue for identifying and analyzing emerging risks.”
Regulators
U.S. Regulators Seek Public Input for a Joint CFTC-SEC Study on International Swap Regulation
Press Release
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have approved for publication in the
Federal Register a request for comment that is expected to assist in conducting a joint study on international swap regulation.
http://jlne.ws/ngnKPN
CFTC Chairman Gary Gensler Announces Appointment of Tony Thompson as Executive Director
Press Release
Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced the appointment of Tony Thompson to serve as the agency’s Executive
Director. Mr. Thompson is the Deputy Administrator for the Office of Management at the U.S. Department of Agriculture’s (USDA) Food Safety and Inspection
Service (FSIS). Mr. Thompson will replace Madge Bolinger Gazzola, who recently retired after almost 35 years at the CFTC.
http://jlne.ws/nSxpf7
IMF External Relations Department Director Caroline Atkinson Notifies Management of Intention to Leave the Fund
Ms. Caroline Atkinson, Director of the International Monetary Fund's External Relations Department (EXR), has notified IMF Managing Director Christine
Lagarde of her intention to leave the Fund following her appointment to a position at the White House as Special Assistant to the President for International
Economic Affairs. Ms. Atkinson, who was named to her current IMF post in November 2008 (see Press Release No. 08/194), will relinquish her responsibilities
immediately and will resign from the Fund effective August 5, 2011. The IMF will begin shortly the process of selecting a new EXR Director; Mr. Gerry Rice will
serve, effective immediately, as Acting Director.
http://jlne.ws/mRV89d
Financial Stability Oversight Council Releases First Annual Report
Press Release
On the heels of the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Financial Stability Oversight Council
released its 2011 Annual Report. The report – the first of its kind issued by the U.S. government – was produced collaboratively by the members of the
Council and their staff, and unanimously approved by the Council.
http://jlne.ws/qeEwf9
FINRA Warns Investors About Chasing Returns in Structured Products, High-Yield Bonds and Floating-Rate Loan Funds
Press Release
The Financial Industry Regulatory Authority (FINRA) today issued an Investor Alert warning investors about putting their assets into riskier and
sometimes complex products that promise higher returns than more traditional investments. With yields on many fixed-income investments at historically
low levels and a volatile stock market, investors may be tempted to chase returns by investing in structured notes with principal protection, high-yield
bonds, floating-rate loan funds and leveraged products.
http://jlne.ws/ocb0Wd
Global News
U.K. Treasury to Stick to Fiscal Tightening, Minister Insists
By ALISTAIR MACDONALD And DAVID ENRICH, WSJ
The U.K. Treasury is digging in its heels when it comes to its deficit-reduction plans, insisting it won't reconsider them even if Europe's financial crisis
significantly intensifies, a U.K. Treasury minister said Thursday.
http://jlne.ws/rhAT3q
Barnier seeks to soothe UK over banks
By Brooke Masters and Patrick Jenkins in London - Financial Times
The UK would still be able to ringfence its retail banks and impose extra capital requirements on them under the proposed European Union regulations
that seek to harmonise capital rules across the 27-member bloc, Michel Barnier, EU’s internal market commissioner, told the Financial Times.
http://jlne.ws/qHLaRw
Investors to Buy Into Bank of Ireland
BY EAMON QUINN, WSJ
DUBLIN—Investors plan to buy a large stake in Bank of Ireland PLC, helping to keep the country's largest lender out of majority government
ownership, Irish Finance Minister Michael Noonan said Monday.
http://jlne.ws/nh2IFj
Bank of China a likely buyer for RBS jet unit: report
Reuters
Bank of China is a leading contender in the race to acquire the aircraft leasing business being sold off by Royal Bank of Scotland , the Sunday Times
reported without citing sources.
http://jlne.ws/rfdm2s
China's urban unemployment rate stands at 4.1% at June end
People's Daily Online
China's registered urban unemployment rate stood at 4.1 percent at the end of June, with 9.08 million people being registered to be unemployed, the
Ministry of Human Resources and Social Security said on Monday.
http://jlne.ws/raQqgl
Santander Profit Tumbles On UK Charge; Delays IPOs
By Christopher Bjork, DOW JONES NEWSWIRES
Spanish banking giant Banco Santander SA (STD) Wednesday reported a 38% drop in second-quarter net profit, after it set aside EUR620 million to
cover potential claims for customers in the U.K. who were miss-sold payment protection insurance policies. Net profit for the largest bank in the
euro-zone by market valuation plunged to EUR1.39 billion from EUR2.23 billion a year earlier. Analysts had on average expected profit of EUR2.07
billion, however they hadn't factored in the surprise U.K. charge.
http://jlne.ws/n2QGz1
Emerging markets warn IMF over fresh Greek loan plan
By Alan Beattie in Washington, Financial Times
Representatives of leading emerging market countries at the International Monetary Fund have warned the fund’s management against pouring more
large sums of money into another Greek bail-out with uncertain prospects.
http://jlne.ws/nlIKk7
Bank plan for Greece won't cause CDS payout: ISDA
Reuters
International bank plans for a voluntary program of debt swaps and buybacks to help rescue Greece won't trigger a "credit event" and payment of CDS
contracts, derivatives body ISDA told Reuters on Friday, limiting the fallout of any default rating.
http://jlne.ws/rlBTKy
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI, WSJ
Moody's Investors Service Monday slashed the Greek government's debt ratings three notches deeper into junk territory, warning that
the nation's newest bailout deal implies a temporary sovereign default and sets a bad precedent in the 17-country euro zone.
http://jlne.ws/paxPw5
Central Bank May Be Winner in Europe’s Debt Talks
By JACK EWING, NY Times
Chancellor Angela Merkel of Germany and other European leaders appeared to act in defiance of the European Central Bank when
they insisted that banks contribute to the latest rescue plan for Greece. But the central bank president, Jean-Claude Trichet, may consider himself the real
winner of the week.
http://jlne.ws/p9bN2C
Big banks to attend eurozone summit: report
DW-World
Deutsche Bank CEO Josef Ackermann and other European banking sector heavyweights have been invited to the latest eurozone summit to discuss new
strategies for handling the Greek debt crisis.
http://jlne.ws/qnGkuF
EU leaders agree E109bn Greek bail-out
By Peter Spiegel and Quentin Peel in Brussels, and Patrick Jenkins and Richard Milne in London - Financial Times
European leaders have agreed a new E109bn bail-out of Greece under which private bondholders will be called on to participate for the first time, contributing
a target of a further E37bn.
http://jlne.ws/pT8wJl
Disclaimer: The John Lothian, Environmental Markets, JLN Metals, JLN Managed Futures, JLN Interest Rates, JLN Options and JLN FX newsletters and blogs and MarketsWiki are products of John J. Lothian & Company, Inc. The opinions expressed in these publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers.
Futures and options trading involve risk. Past results are no indication of future performance.
Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any web site or newsletter content.
Copyright 2011 John J. Lothian & Company, Inc. All Rights Reserved.
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
MarketAxess Reports Second Quarter 2011 Record Revenues of $45.8 Million, Record Pre-Tax Income of $19.9 Million and Diluted EPS of $0.30
Press Release
NEW YORK, July 27, 2011 /PRNewswire/ -- MarketAxess Holdings Inc., the operator of an electronic trading platform for U.S. and European
high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the second quarter ended
June 30, 2011.
http://jlne.ws/oqu7Vq
Five Minutes With Richard M. McVey, Chief Executive Officer And Chairman Of The Board, MarketAxess
MarketAxess Holdings Inc. reported its second quarter earnings this week, and MarketAxess CEO and chairman Richard M. McVey told JLN Managing Editor
Christine Nielsen during a post-earnings call that credit trading conditions remain "very favorable." Investors are moving money as a result of the very steep
yield curve and, overall, the corporate bond market is active. He said the firm's healthy earnings were a sign of MarketAxess’ momentum in emerging market,
high yield and agency debt. As of late, MarketAxess has had a big focus on CDS and the technology solutions that will meet the criteria established by
Dodd-Frank.
Q: You recently released an enhanced institutional credit trading system. What does it offer that makes it significant?
A: The new enhancements to the platform were focused on adding CDS trading functionality. While CDS has been available on our platform for about five years,
with these enhancements we have significantly increased the flexibility of the platform. We now have two dealers - Credit Suisse and RBS - streaming live,
executable prices onto the MarketAxess platform for CDX and iTraxx. We are planning to add an additional six to eight dealers in the coming weeks.
The streaming markets provided by these dealers sit alongside our traditional request-for-quote (RFQ) auction-style protocol, giving customers greater pre-trade
price transparency, as well as flexibility in their means of execution. Now customers can view the live market prices even if they trade via an RFQ. We have also
increased post-trade functionality for trade affirmation and connectivity to clearing houses.
Q: Why was the system released at this point and time?
A: This technology release was originally timed to coincide with the mandated Dodd-Frank rule-making deadline, which was July 16th, 2011. However, despite
this deadline having been extended until the end of the year, we are still working closely with our dealer and buy-side customers to offer greater flexibility and
connectivity for electronic CDS trading. We are constantly making enhancements to our system, and although this was a major release for CDS, it won’t be
the last as we continuously look to improve our platform for CDS and other products.
Q: What sort of reception have you received so far to the system?
A: We’ve had very positive feedback from clients with respect to the new functionality. They feel that we have addressed many of their requirements for
execution and connectivity and we are consulting with them closely as we continue to make changes. In addition, many of the dealers in the U.S. and Europe
are also on board and looking to provide streaming prices to MarketAxess.
Q: Your firm has said that with this release, MarketAxess now has much of the core technology needed to meet the anticipated regulatory
requirements for registration as a swap execution facility (SEF) and security-based swap execution facility (SB SEF) under the Dodd-Frank Act in
the U.S. How so?
A: The new functionality is broadly in three key areas:
Pre-trade: Streaming, executable prices from dealers provide increased pre-trade price transparency. The platform now also offers the ability to designate a
clearing house and clearing member pre-trade. Execution: A variety of trading protocols - including RFQ and click-to-trade (streaming markets) available on the
same screen - increase flexibility for clients and address the anticipated regulatory requirements from both the CFTC and SEC. We have also added functionality
for single-name CDS as well as switches and rolls. Post-trade: We offer the ability to connect to available clearing houses, and enhanced functionality for trade affirmation.
Q: How does the MarketAxess offering compare with other firm offerings out there for institutional credit trading? How does this technology
position MarketAxess competitively speaking?
A: MarketAxess is the leading client to multi-dealer electronic platform for trading U.S. high grade and other fixed-income products including high yield,
agencies, emerging markets and Eurobonds. We currently have over 850 buy-side customers and 81 dealers live on our platform, and that number continues
to grow.
We think that our extensive buy-side client and dealer network for fixed income places us in a very strong position to be a key platform for electronic trading
of CDS.
Q: What will be the next steps that MarketAxess takes to prepare for Dodd-Frank? Will there be any other steps?
A: We are monitoring the progress of the Dodd-Frank rulemaking and will continue to develop our platform to respond to the regulatory requirements as they
are finalized. We do feel that we have a lot of the key functionality to comply with the rules as we currently understand them. Obviously, until the rules are final
we can’t be certain of exactly what will be required. We expect there may be additional changes needed, but for now we think we are in good shape.
Q: Is there anything that recent media reports haven't mentioned about MarketAxess that market users should know?
A: One trend that we’ve noticed is the concurrent increase in market share for our corporate bond business as discussions surrounding electronic trading in
the derivatives market have evolved. Our share of the U.S. high grade market has increased to 11.1% for this past quarter, up from 9.9% in Q1 2011, and 8.1%
a year ago. We believe that the continued focus on electronic trading as part of the broader conversation on market structure has encouraged dealers and
clients to look more closely at the ways in which they conduct their trading operations to maximize efficiency.
-- Christine Nielsen
Lead Stories
Debt-Crisis Vote Goes Down to Wire in House
BY NAFTALI BENDAVID AND CAROL E. LEE, WSJ.com
The House was headed for a cliffhanger vote Thursday on a revised debt plan from Republican Speaker John Boehner that could go a long way in determining
if the government's borrowing limit is raised in time to avoid a possible default next week.
http://jlne.ws/qH7lGq
U.S. debt crisis casts doubt on IMF power balance
How much each member of the IMF contributes to the organization is up for review in 2013 and countries like China, Brazil and India could be asked to
contribute more, given the serious fiscal difficulties of traditional large contributors, says a recent report.
http://jlne.ws/qu9vdz
Would a U.S. Credit Downgrade Matter?
BY DAVID WESSEL, WSJ.com
A prediction, widely shared in Washington and on Wall Street: One month from now, Congress will have lifted the federal debt ceiling, the U.S. government
will be paying its bills, the president will have signed a convoluted deficit-reduction law that defers decisions on benefits and taxes—and the
U.S. will have lost its AAA credit rating.
http://jlne.ws/oETsqp
Policymakers must reduce reliance on credit ratings
By Deven Sharma, Financial Times
What is the appropriate role of independent credit ratings in the financial system? That is the question raised by recent events in the eurozone and one
that has prompted a flurry of suggestions from European policymakers, from intervening in ratings methodologies to suspending certain sovereign ratings.
http://jlne.ws/n2YFlA
Republican debt plan faces close vote in Congress
By Andy Sullivan, Reuters
A bill to cut the deficit faced a nail-bitingly close vote in Congress on Thursday as the top Republican lawmaker sought to quell an internal revolt and
push his plan to avoid a ruinous default.
http://jlne.ws/r11ZVA
Debt ceiling debate risks double-dip recession
CNNMoney
Economists say the debt ceiling debate has already damaged the U.S. economy, and many worry that a deadlock could send the country hurtling into a
double-dip recession.
http://jlne.ws/p4xVUg
US debt limit: Rival plans unveiled as deadline nears
BBC News
Senate Democrats and House Republicans have unveiled competing plans to cut the US budget deficit and raise its debt limit to avoid a default.
http://jlne.ws/pO9KnJ
House Leaders Call for Short-Term Rise in Debt Ceiling
The New York Times
House Republicans intend to push for a vote this week on a two-step plan that would allow the federal debt limit to immediately rise by about $1 trillion
and tie a second increase next year to the ability of a new joint Congressional committee to produce more deficit reduction.
http://jlne.ws/oE30Lv
Boehner Fights Internal Strife Over Debt Plan
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt-ceiling standoff with President Barack Obama,
worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/pnXo3a
Companies Bracing for U.S. Default
BY KATE LINEBAUGH AND VIPAL MONGA, WSJ.com
The unthinkable is finally becoming reality for U.S. companies, who are beginning to take real steps to prepare for the possibility of a U.S. debt default.
While companies generally expect Washington to resolve the debt-ceiling impasse at the last moment, they are lining up extra sources of financing, and
carefully husbanding cash just in case a deal falls through.
http://jlne.ws/qHg9bw
Fed under fire over default talks
By Tom Braithwaite and Michael Mackenzie in New York and Robin Harding in Washington, Financial Times
Wall Street bankers, from senior executives to traders, are complaining that the Federal Reserve is refusing to engage in scenario planning for a US
downgrade or default. With days until the Treasury’s August 2 deadline to raise the debt ceiling, bankers say they are not getting a response to efforts to
discuss the market impact of a failure to reach a deal in Washington or if credit ratings agencies cut the US triple A rating.
http://jlne.ws/oLeraw
Chinese Officials ‘Appalled’ by U.S. Impasse: Roach
Senior Chinese officials are “appalled” by the impasse among U.S. politicians on raising the nation’s debt ceiling to avoid a default, said Stephen Roach,
non-executive chairman of Morgan Stanley Asia Ltd.
http://jlne.ws/qJGV2Z
U.S. Credit Swap Trading Soars 80% as Deadline Nears
By Abigail Moses, Bloomberg
Trading of credit-default swaps insuring U.S. Treasuries soared almost 80 percent as the deadline nears for plans to cut the nation’s budget deficit and
raise the $14.3 trillion debt limit to avoid default.
http://jlne.ws/oh9tPT
U.S. Contingency Plan Gives Bondholders Priority
Bloomberg
The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise
the debt ceiling, according to an administration official.
http://jlne.ws/pAoTTK
U.S. Credit Rating Rests On S&P’s London View of Washington
By Brian Faler, Bloomberg
David Beers may be the most influential political commentator in the U.S. right now, even though he’s hardly a household name,
that isn’t technically his job and he’s only visiting.
http://jlne.ws/pdi7T9
The debt ceiling deadline: The downgrade option
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt- ceiling standoff with President Barack Obama,
worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/rhtXhi
Why the credit rating agencies are keeping a close eye on the US
The Telegraph
The switchboard at Congress almost crashed on Tuesday as Americans voiced their anger at the stalemate in Washington over raising the country's
$14.3 trillion (£8 trillion) debt ceiling. Here is the verdict of the ratings agencies on the US debt problem.
http://jlne.ws/qbCkAA
Would a U.S. Credit Downgrade Matter?
BY DAVID WESSEL, WSJ.com
A prediction, widely shared in Washington and on Wall Street: One month from now, Congress will have lifted the federal debt ceiling, the U.S.
government will be paying its bills, the president will have signed a convoluted deficit-reduction law that defers decisions on benefits and taxes—and the
U.S. will have lost its AAA credit rating.
http://jlne.ws/oETsqp
Treasury May Have 3 Days To Fix A Default Before CDS Trigger
TeleTrader
If the U.S. fails to raise its borrowing limit by Aug. 2, when the Treasury Department says it will exhaust its supply of tricks to avoid defaulting on federal
debts, it may take a few days for the full shock wave to hit the credit-derivatives market. A panel of derivatives experts would likely declare a "credit
event," triggering payouts on $4.77 billion in credit-default swaps, or CDS, on U.S. Treasurys, should the government default on $90 billion of debt
maturing Aug. 4 and not make investors whole by the close of business Aug. 9, swaps executives told Dow Jones Newswires on Monday.
http://jlne.ws/nua9aX
S&P Stays Mum on Rating for U.S.
By JEAN EAGLESHAM And JEANNETTE NEUMANN, WSJ
Standard & Poor's Ratings Services left the threat of a downgrade hanging over the U.S., declining to tell anxious lawmakers on Wednesday whether
rival tax and spending plans floated in Washington would save the U.S.'s triple-A credit rating.
http://jlne.ws/qRjadG
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI And MARCUS WALKER, WSJ.com
European bond markets fell on Monday after Moody's Investors Service cut Greece's credit rating three notches deeper into junk territory, warning that
the country's latest bailout deal implies a default.
http://jlne.ws/ow2pJH
S and P sees 2nd Greek debt haircut, new downgrade
Reuters
A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor's said on
Tuesday, adding a further downgrade of Greece's sovereign debt rating was "pretty certain."
http://jlne.ws/pcoXxV
Banks stock up on cash amid US rating fear
By Justin Baer, Tom Braithwaite and Michael Mackenzie in New York
US banks are holding on to more cash and locking in longer-term financing as they brace themselves for the consequences of a potential downgrade of
the US’s triple A credit rating. Washington remains deadlocked over the nation’s budget, edging the US closer to a pivotal August 2 deadline to extend
its borrowing authority – and prompting financial institutions to plan for a set of scenarios that once seemed remote.
http://jlne.ws/r160Hj
Fitch downplays downgrade fallout
By Peter Schroeder, The Hill
A credit-rating agency said Wednesday that Treasury bonds likely would remain the gold standard for secure investments, even if Treasury’s reputation
were tarnished with a credit downgrade.
http://jlne.ws/pyfP1K
SEC Adopts New Short Form Criteria to Replace Credit Ratings
Press Release
Washington, D.C., July 26, 2011 – The Securities and Exchange Commission today voted unanimously to adopt new rules in light of the Dodd-Frank
Wall Street Reform and Consumer Protection Act to remove credit ratings as eligibility criteria for companies seeking to use “short form” registration
when registering securities for public sale.
http://jlne.ws/pPOaVA
Moody's Shakes Downgrade Stick at 177 Muni Issuers
By Mark Gongloff, WSJ.com
This isn’t all that unexpected, but it’s never fun to get the news: Moody’s has warned it could downgrade 177 muni issuers if the US loses its AAA rating.
http://jlne.ws/pw3Ihr
Moody's reaffirms Canada's triple-A rating
CBC News
Bond rating agency Moody's Investor Services is maintaining Canada's debt rating at triple-A, the highest possible. The firm said Thursday the AAA rating
was warranted, citing among other things, the country's "high degree of economic resiliency" and deficit-cutting efforts by the federal and provincial governments.
http://jlne.ws/nLKiYy
Moody’s Sees Benefits for Banks From Consumer Bureau
By BEN PROTESS, NY Times
The new Consumer Financial Protection Bureau has ignited fear on Wall Street. But many banks may eventually benefit from the regulator’s careful watch,
according to a new report by Moody’s Investors Service.
http://jlne.ws/oniyVd
**CN: Finally, some good news.
ISDA: CDS On US Sovereign Debt Q&A
Press Release
http://jlne.ws/orxxRa
Heading for a 'Haircut' in Repo Market
BY MATT PHILLIPS, BEN LEVISOHN AND SERENA NG, WSJ.com
The debt stalemate in Washington is creating stress in a little-known but vital corner of the bond market, increasing the risk that banks, hedge funds and
other investors will have to pay billions of dollars in additional costs if the U.S. defaults or is downgraded.
http://jlne.ws/mX3F3a
CME CEO Sees Migration From Swaps To Futures
By Jacob Bunge, Of DOW JONES NEWSWIRES
The top executive of CME Group Inc. (CME) said Thursday that investors are showing signs of embracing futures trading in place of more complex
swap products as stricter rules for such off-exchange derivatives loom on the horizon. A second-quarter surge in interest-rate-futures trading at CME got
a lift from anticipated regulations that will bring higher capital requirements for banks and evolving accounting standards, making the swaps market more
futures-like, said Craig Donohue, chief executive.
The 'Bond Vigilantes' and the Debt Ceiling Crisis: No Need to Panic or Lying in Wait?
PBS
Harvard's eminent trade economist, Robert Lawrence, gave a talk in Greece this month. Among his slides was this image with the headline: "The
Vigilantes are Asleep!" That would be the so-called "bond vigilantes" - the investors in the world's bounteous supply of IOUs, with specific reference to
the IOUs of the United States - our Treasuries (bonds, notes and bills).
http://jlne.ws/of3VMy
Treasury May Have 3 Days To Fix A Default Before CDS Trigger
By Katy Burne Of DOW JONES NEWSWIRES
If the U.S. fails to raise its borrowing limit by Aug. 2, when the Treasury Department says it will exhaust its supply of tricks to avoid defaulting on federal
debts, it may take a few days for the full shock wave to hit the credit-derivatives market.
http://jlne.ws/nua9aX
Cost To Insure Treasurys Sets Record As Debt Debate Drags On
By Katy Burne, DOW JONES NEWSWIRES
The cost to insure U.S. sovereign bonds against non-payment soared to a fresh record Wednesday as the debt-ceiling standoff in Washington continued
and the government moved inexorably closer to a potential debt default. The price of one-year protection sold in the form of derivatives called
credit-default swaps, or CDS, is now above the cost of five-year protection--a sign that confidence in the government reaching an eleventh-hour deal is
waning.
http://jlne.ws/oz4FK4
Infographic: Where America Spent All of Its Money
Forbes
The White House posted the following infographic on its website today explaining how America accumulated its national debt over the past decade,
shifting fiscal forecasts from projected surpluses to elephantine deficits.
http://jlne.ws/nGhoKb
Infographic on Dodd-Frank
Clarke Camper - Inside the Beltway
In the Atlantic, I just came across this chart by Deloitte that provides a fascinating visual representation of progress in implementing Dodd-Frank: Chart
of the Day: The Sluggishness of Financial Regulation.
http://jlne.ws/q70qOd
Collateral Rules Criticized
BY AARON LUCCHETTI, WSJ
Some lawmakers and financial firms are resisting rules being written to implement last year's Dodd-Frank law that could require banks to set aside more
collateral when they make certain trades in the derivatives market.
http://jlne.ws/q7Wd33
Inflation Expectations Matter
By Michael S. Derby, WSJ.com
An axiom of central banks these days holds that what consumers reckon future inflation will be is an important driver of prices now. Put another way, if
the public expects prices to rise in the future, inflation will start to rise now. So Federal Reserve officials have decided understanding, measuring and
controlling inflation expectations is a critical part of its mandate to keep inflation stable.
http://jlne.ws/mRKTA7
Free-marketeers and inflation: Missing Milton Friedman
The Economist
TIM LEE asks an important question: why are conservatives and libertarians so uniformly hawkish about inflation? Mr Lee (a friend and former
colleague) notes that this regularity is far from inevitable. Milton Friedman, a revered figure in right-of-centre circles, famously pinned the severity of the
Great Depression on contractionary monetary policy. Scott Sumner, a professor of economics at Bentley University who identifies himself as a
"neo-monetarist", has argued that Friedman would have supported monetary stimulus. And he has argued, on neo-Friedmanite grounds, that tight
monetary policy both precipitated and exacerbated our recent recession.
http://jlne.ws/rsSeJI
Gold hits record as U.S. debt talks grind on
By Claudia Assis and Virginia Harrison, MarketWatch
Gold futures traded in record territory Monday as U.S. debt-ceiling talks to avert a default continued, with little to indicate progress toward a deal, and
as a debt-ratings agency further downgraded Greece.
http://jlne.ws/qh0KOS
Beware of perceived safe havens
By Richard Milne, Financial Times
Risky assets do not cause crises. It is those perceived as being safe that do. Such a statement might sound counter-intuitive. However, it reveals much
about the current crisis as well as the recent past. The subprime crisis of 2007-08 was exacerbated by the fact that so many of the mortgage-backed
securities spewed out by banks were rated triple A. That meant they could essentially be considered “risk-free” for banks, when, of course, they were
anything but.
http://jlne.ws/nlVGFO
Fitch: U.S. Treasuries Expected To Remain Global Benchmark
http://jlne.ws/rjU1Jt
Global Commission Management Update: No Credit Too Small
Press Release
London, 21 July, 2011 – A new report from Aite Group examines the key trends that have developed in the commission management industry since the
2006 implementation of new regulation in the United States and U.K. The report also explores the adoption of commission management in the European
and Asian markets, and major commission management initiatives provided by full-service and agency brokers.
http://jlne.ws/oJ4dH7
Soros Returns Client Money to End Four-Decade Hedge-Fund Career
By Katherine Burton, Bloomberg
George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a
career as hedge-fund manager that spanned more than four decades.
http://jlne.ws/p82XB9
Events
Credit Risk in Emerging Markets
August 1, 2011
www.theIFM.org
Making Sense of Credit Default Swaps
August 10, 2011
www.theIFM.org
FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
Economic News
Growth slows as labor markets ‘soft’
By Steve Goldstein, MarketWatch
Soft labor markets and weak real estate offset a slight boost to consumer spending and an encouraging start to the tourism season, the Federal Reserve
reported Wednesday in its Beige Book of anecdotal evidence on the U.S. economy.
http://jlne.ws/pb3uhy
Beige Book: District-by-District Summary
http://jlne.ws/nSKHwM
German Inflation Rises
BY WILLIAM LAUNDER AND TODD BUELL, WSJ.com
Preliminary consumer-price inflation in Germany rose in July, exceeding economists' forecasts on higher energy prices, the German Federal statistics
office said Wednesday.
http://jlne.ws/nB00rU
Exchanges, Clearing Houses & MTFs
CME Globex Enhancements for Interest Rate Products
Press Release
Effective August 2011, a number of CME Globex enhancements for CBOT and CME Interest Rate futures products will be introduced. The changes to
our CBOT interest rate products will take place on Sunday, August 7, 2011 (trade date August 8) and to CME products on Sunday, August 21, 2011
(trade date August 22).
CME Group Collateral Haircuts
As per the normal review of market volatility to ensure adequate collateral coverage, CME Clearing will implement the following collateral haircuts
effective with the close of business on Thursday, July 28, 2011.
Asset class: TBILL Current haircut: 0.0% New haircut: 0.5% ...
http://jlne.ws/ovU2XH
Cost of Treasury futures set to rise
By Michael Mackenzie, Financial Times
The cost of trading US Treasury futures was set to rise on Monday, as the CME Group adopted defensive measures given the impasse in Washington over raising the Federal debt ceiling.
http://jlne.ws/ngGGtH
Tradeweb Launches Electronic European Repo Marketplace
PR Newswire
Tradeweb Markets LLC, a leader in building and operating financial markets, today announced the launch of a European repo marketplace. The
electronic dealer-to-customer platform mirrors the existing voice and message-based trading process, while enabling efficient trade execution and
substantially simplifying the post-trade complexities of collateral assignment and allocation.
http://jlne.ws/oaxxuO
Firms & Banks
HSBC may cut more than 10,000 jobs: report
Reuters
Banking group HSBC Holdings Plc may cut more than 10,000 jobs as part of its plan to slash costs by up to $3.5 billion a year, Sky News reported
Thursday.
http://jlne.ws/pCmvCG
RRP Eligibility Criteria: Banks and Savings Associations
Federal Reserve Bank of New York
This document sets forth the criteria for acceptance of a bank or savings association as a counterparty eligible to participate in reverse repurchase
transactions (RRP) with the Federal Reserve Bank of New York (FRBNY). FRBNY may engage in RRP, if at all, at the direction of the Federal Open
Market Committee (FOMC).
http://jlne.ws/oyytnC
Fed orders RBS to improve U.S. operations
By Glenn Somerville, Editing by Chizu Nomiyama, Reuters
The Federal Reserve on Wednesday ordered the Royal Bank of Scotland Group to develop a plan for improving oversight
of its U.S. operations and tightening its risk-management practices.
http://jlne.ws/qzALYn
Five Banks Have $6.8 Billion of Derivatives With Italy, EBA Says
Bloomberg
Five European banks have a total of 4.8 billion euros ($6.8 billion) of derivatives contracts with the Italian government, according to data released for the
first time by European regulators.
http://jlne.ws/oNruap
Investors Get Win In a Lehman Case
By Patrick Fitzgerald, Dow Jones
Britain's Supreme Court on Wednesday dismissed an appeal by units of Lehman Brothers Holdings Inc. and Bank of New York Mellon, a win for
investors in a high-stakes legal dispute involving complex derivatives transactions that has divided courts on both sides of the Atlantic. The U.K.'s
Supreme Court, the nation's highest, ruled unanimously in favor of investors represented by Australia's Belmont Park Investments over Lehman's
Specialty Finance unit -- the heart of the bank's derivatives business -- and BNY Corporate Trustee Services Ltd., now part of Bank of New York
Mellon, in a battle over so-called flip clauses in credit derivatives contracts. These provisions "flipped" the payment priority order when Lehman filed for
bankruptcy, allowing the investors to move ahead of the investment bank to grab assets backing the derivatives deals.
Goldman Sachs CMBS Trading Head Salem Said to Leave the Bank
By Sarah Mulholland and Jody Shenn, Bloomberg
Matthew Salem, head of commercial- mortgage bond trading at Goldman Sachs Group Inc., has left the bank, according to a person familiar with the
situation.
http://jlne.ws/p0pPFI
MF Global Hires Heads of Structured Mortgage, CMBS Trading
By Matthew Leising, Bloomberg
MF Global Holdings Ltd., the futures broker that’s transitioning into an investment bank, hired Christopher Belhumeur and Chris
Lau to expand trading in structured products and commercial-mortgage backed securities. Belhumeur, 40, previously co-head of agency collateralized
mortgage obligations and derivatives at Jefferies Group Inc., began yesterday as head of structured mortgage trading, said Tiffany Galvin, MF Global’s
spokeswoman. Lau, 38, who led Gleacher and Co.’s CMBS trading and started at MF Global last week, will assume that role for the company.
They will report to Jon Bass, global head of institutional sales and fixed income, Galvin said.
Deutsche Names Two as Co-CEOs
German Bank Will Pair Indian-Born Jain With German Head Fitschen; Ackermann Moves to Board
BY LAURA STEVENS - WSJ
Straddling its twin roles as a global investment-banking powerhouse and huge German lender, Deutsche Bank AG on Monday resolved months of
indecision over its leadership by appointing two top executives to succeed CEO Josef Ackermann.
http://jlne.ws/njOqpt
Deutsche Eyes Jain for Co-CEO Post
By LAURA STEVENS, WSJ.com
Anshu Jain, Deutsche Bank AG's Indian-born, London-based head of investment banking, looks set to take over as joint chief executive and become
the real power at Germany's most powerful bank, according to people familiar with the matter.
http://jlne.ws/nSJ1Gq
UBS to cut costs and rethink fixed income unit
Reuters
Switzerland's UBS will slash jobs and review the future of its fixed income business after the underperforming unit hit second-quarter profits and forced it to push
back targets.
http://jlne.ws/r0h71E
Goldman Succession May Be Hurdle for Cohn
By Max Abelson and Christine Harper, Bloomberg
Michael Ovitz, the former Hollywood agent whose company was said to have created enemies “the way a hurricane produces raindrops,” first met Gary
Cohn over lunch at Goldman Sachs Group Inc. (GS)’s headquarters in June 2009.
http://jlne.ws/pDmkXP
NCUA Gives Voice to Credit Unions as FSOC Releases First Emerging Risks Study
Matz Signs Attestation for FSOC Annual Report
ALEXANDRIA, Va. (July 26, 2011) – National Credit Union Administration (NCUA) Board Chairman Debbie Matz attested to Congress her
approval of the Financial Stability and Oversight Council’s (FSOC) annual report with recommendations. The FSOC released its first annual review of
emerging risks in the financial system today. During the past year, NCUA has worked with other regulators on the FSOC to implement the initiatives
mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act to restore integrity in the markets and strengthen the public’s trust in the financial
system. “Our combined FSOC activities, independent actions, and joint rulemakings are correcting many of the weaknesses laid bare by the
financial crisis,” said Matz at the FSOC’s July 18 meeting. “Together, on the FSOC, we have made significant progress in issuing a number of important
studies, proposed and final rules, and establishing a venue for identifying and analyzing emerging risks.”
Regulators
U.S. Regulators Seek Public Input for a Joint CFTC-SEC Study on International Swap Regulation
Press Release
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have approved for publication in the
Federal Register a request for comment that is expected to assist in conducting a joint study on international swap regulation.
http://jlne.ws/ngnKPN
CFTC Chairman Gary Gensler Announces Appointment of Tony Thompson as Executive Director
Press Release
Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced the appointment of Tony Thompson to serve as the agency’s Executive
Director. Mr. Thompson is the Deputy Administrator for the Office of Management at the U.S. Department of Agriculture’s (USDA) Food Safety and Inspection
Service (FSIS). Mr. Thompson will replace Madge Bolinger Gazzola, who recently retired after almost 35 years at the CFTC.
http://jlne.ws/nSxpf7
IMF External Relations Department Director Caroline Atkinson Notifies Management of Intention to Leave the Fund
Ms. Caroline Atkinson, Director of the International Monetary Fund's External Relations Department (EXR), has notified IMF Managing Director Christine
Lagarde of her intention to leave the Fund following her appointment to a position at the White House as Special Assistant to the President for International
Economic Affairs. Ms. Atkinson, who was named to her current IMF post in November 2008 (see Press Release No. 08/194), will relinquish her responsibilities
immediately and will resign from the Fund effective August 5, 2011. The IMF will begin shortly the process of selecting a new EXR Director; Mr. Gerry Rice will
serve, effective immediately, as Acting Director.
http://jlne.ws/mRV89d
Financial Stability Oversight Council Releases First Annual Report
Press Release
On the heels of the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Financial Stability Oversight Council
released its 2011 Annual Report. The report – the first of its kind issued by the U.S. government – was produced collaboratively by the members of the
Council and their staff, and unanimously approved by the Council.
http://jlne.ws/qeEwf9
FINRA Warns Investors About Chasing Returns in Structured Products, High-Yield Bonds and Floating-Rate Loan Funds
Press Release
The Financial Industry Regulatory Authority (FINRA) today issued an Investor Alert warning investors about putting their assets into riskier and
sometimes complex products that promise higher returns than more traditional investments. With yields on many fixed-income investments at historically
low levels and a volatile stock market, investors may be tempted to chase returns by investing in structured notes with principal protection, high-yield
bonds, floating-rate loan funds and leveraged products.
http://jlne.ws/ocb0Wd
Global News
U.K. Treasury to Stick to Fiscal Tightening, Minister Insists
By ALISTAIR MACDONALD And DAVID ENRICH, WSJ
The U.K. Treasury is digging in its heels when it comes to its deficit-reduction plans, insisting it won't reconsider them even if Europe's financial crisis
significantly intensifies, a U.K. Treasury minister said Thursday.
http://jlne.ws/rhAT3q
Barnier seeks to soothe UK over banks
By Brooke Masters and Patrick Jenkins in London - Financial Times
The UK would still be able to ringfence its retail banks and impose extra capital requirements on them under the proposed European Union regulations
that seek to harmonise capital rules across the 27-member bloc, Michel Barnier, EU’s internal market commissioner, told the Financial Times.
http://jlne.ws/qHLaRw
Investors to Buy Into Bank of Ireland
BY EAMON QUINN, WSJ
DUBLIN—Investors plan to buy a large stake in Bank of Ireland PLC, helping to keep the country's largest lender out of majority government
ownership, Irish Finance Minister Michael Noonan said Monday.
http://jlne.ws/nh2IFj
Bank of China a likely buyer for RBS jet unit: report
Reuters
Bank of China is a leading contender in the race to acquire the aircraft leasing business being sold off by Royal Bank of Scotland , the Sunday Times
reported without citing sources.
http://jlne.ws/rfdm2s
China's urban unemployment rate stands at 4.1% at June end
People's Daily Online
China's registered urban unemployment rate stood at 4.1 percent at the end of June, with 9.08 million people being registered to be unemployed, the
Ministry of Human Resources and Social Security said on Monday.
http://jlne.ws/raQqgl
Santander Profit Tumbles On UK Charge; Delays IPOs
By Christopher Bjork, DOW JONES NEWSWIRES
Spanish banking giant Banco Santander SA (STD) Wednesday reported a 38% drop in second-quarter net profit, after it set aside EUR620 million to
cover potential claims for customers in the U.K. who were miss-sold payment protection insurance policies. Net profit for the largest bank in the
euro-zone by market valuation plunged to EUR1.39 billion from EUR2.23 billion a year earlier. Analysts had on average expected profit of EUR2.07
billion, however they hadn't factored in the surprise U.K. charge.
http://jlne.ws/n2QGz1
Emerging markets warn IMF over fresh Greek loan plan
By Alan Beattie in Washington, Financial Times
Representatives of leading emerging market countries at the International Monetary Fund have warned the fund’s management against pouring more
large sums of money into another Greek bail-out with uncertain prospects.
http://jlne.ws/nlIKk7
Bank plan for Greece won't cause CDS payout: ISDA
Reuters
International bank plans for a voluntary program of debt swaps and buybacks to help rescue Greece won't trigger a "credit event" and payment of CDS
contracts, derivatives body ISDA told Reuters on Friday, limiting the fallout of any default rating.
http://jlne.ws/rlBTKy
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI, WSJ
Moody's Investors Service Monday slashed the Greek government's debt ratings three notches deeper into junk territory, warning that
the nation's newest bailout deal implies a temporary sovereign default and sets a bad precedent in the 17-country euro zone.
http://jlne.ws/paxPw5
Central Bank May Be Winner in Europe’s Debt Talks
By JACK EWING, NY Times
Chancellor Angela Merkel of Germany and other European leaders appeared to act in defiance of the European Central Bank when
they insisted that banks contribute to the latest rescue plan for Greece. But the central bank president, Jean-Claude Trichet, may consider himself the real
winner of the week.
http://jlne.ws/p9bN2C
Big banks to attend eurozone summit: report
DW-World
Deutsche Bank CEO Josef Ackermann and other European banking sector heavyweights have been invited to the latest eurozone summit to discuss new
strategies for handling the Greek debt crisis.
http://jlne.ws/qnGkuF
EU leaders agree E109bn Greek bail-out
By Peter Spiegel and Quentin Peel in Brussels, and Patrick Jenkins and Richard Milne in London - Financial Times
European leaders have agreed a new E109bn bail-out of Greece under which private bondholders will be called on to participate for the first time, contributing
a target of a further E37bn.
http://jlne.ws/pT8wJl
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Rabu, 27 Juli 2011
Top Interest Rate Headlines 07-27-11: The Debt Ceiling Deadline
The debt ceiling deadline: The downgrade option
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt- ceiling standoff with President Barack Obama, worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/rhtXhi
Boehner Fights Internal Strife Over Debt Plan
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt- ceiling standoff with President Barack Obama, worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/pnXo3a
Companies Bracing for U.S. Default
BY KATE LINEBAUGH AND VIPAL MONGA, WSJ.com
The unthinkable is finally becoming reality for U.S. companies, who are beginning to take real steps to prepare for the possibility of a U.S. debt default. While companies generally expect Washington to resolve the debt-ceiling impasse at the last moment, they are lining up extra sources of financing, and carefully husbanding cash just in case a deal falls through.
http://jlne.ws/qHg9bw
U.S. has 3 days grace before CDS triggered - ISDA
Karen Brettell, Reuters
The United States would have at least three days to make up for any missed debt payments before it triggered payments on its credit default swaps, according to trade association the International Swaps and Derivatives Association.
http://jlne.ws/qzUh7B
The 'Bond Vigilantes' and the Debt Ceiling Crisis: No Need to Panic or Lying in Wait?
PBS
Harvard's eminent trade economist, Robert Lawrence, gave a talk in Greece this month. Among his slides was this image with the headline: "The Vigilantes are Asleep!" That would be the so-called "bond vigilantes" - the investors in the world's bounteous supply of IOUs, with specific reference to the IOUs of the United States - our Treasuries (bonds, notes and bills).
http://jlne.ws/of3VMy
Banks stock up on cash amid US rating fear
By Justin Baer, Tom Braithwaite and Michael Mackenzie in New York
US banks are holding on to more cash and locking in longer-term financing as they brace themselves for the consequences of a potential downgrade of the US’s triple A credit rating. Washington remains deadlocked over the nation’s budget, edging the US closer to a pivotal August 2 deadline to extend its borrowing authority – and prompting financial institutions to plan for a set of scenarios that once seemed remote.
http://jlne.ws/r160Hj
Inflation Expectations Matter
By Michael S. Derby, WSJ.com
An axiom of central banks these days holds that what consumers reckon future inflation will be is an important driver of prices now. Put another way, if the public expects prices to rise in the future, inflation will start to rise now. So Federal Reserve officials have decided understanding, measuring and controlling inflation expectations is a critical part of its mandate to keep inflation stable.
http://jlne.ws/mRKTA7
Infographic: Where America Spent All of Its Money
Forbes
The White House posted the following infographic on its website today explaining how America accumulated its national debt over the past decade, shifting fiscal forecasts from projected surpluses to elephantine deficits.
http://jlne.ws/nGhoKb
SEC Adopts New Short Form Criteria to Replace Credit Ratings
Press Release
Washington, D.C., July 26, 2011 – The Securities and Exchange Commission today voted unanimously to adopt new rules in light of the Dodd-Frank Wall Street Reform and Consumer Protection Act to remove credit ratings as eligibility criteria for companies seeking to use “short form” registration when registering securities for public sale.
http://jlne.ws/pPOaVA
Beige Book: District-by-District Summary
http://jlne.ws/nSKHwM
Growth slows as labor markets ‘soft’
By Steve Goldstein, MarketWatch
Soft labor markets and weak real estate offset a slight boost to consumer spending and an encouraging start to the tourism season, the Federal Reserve reported Wednesday in its Beige Book of anecdotal evidence on the U.S. economy.
http://jlne.ws/pb3uhy
Financial Stability Oversight Council Releases First Annual Report
Press Release
On the heels of the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Financial Stability Oversight Council released its 2011 Annual Report. The report – the first of its kind issued by the U.S. government – was produced collaboratively by the members of the Council and their staff, and unanimously approved by the Council.
http://jlne.ws/qeEwf9
FITCH: U.S. TREASURIES EXPECTED TO REMAIN GLOBAL BENCHMARK
http://jlne.ws/rjU1Jt
Why the credit rating agencies are keeping a close eye on the US
The Telegraph
The switchboard at Congress almost crashed on Tuesday as Americans voiced their anger at the stalemate in Washington over raising the country's $14.3 trillion (£8 trillion) debt ceiling. Here is the verdict of the ratings agencies on the US debt problem.
http://jlne.ws/qbCkAA
German Inflation Rises
BY WILLIAM LAUNDER AND TODD BUELL, WSJ.com
Preliminary consumer-price inflation in Germany rose in July, exceeding economists' forecasts on higher energy prices, the German Federal statistics office said Wednesday.
http://jlne.ws/nB00rU
S&P sees 2nd Greek debt haircut, new downgrade
Reuters
A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor's said on Tuesday, adding a further downgrade of Greece's sovereign debt rating was "pretty certain."
http://jlne.ws/pcoXxV
Goldman Sachs CMBS Trading Head Salem Said to Leave the Bank
By Sarah Mulholland and Jody Shenn, Bloomberg
July 26 (Bloomberg) -- Matthew Salem, head of commercial- mortgage bond trading at Goldman Sachs Group Inc., has left the bank, according to a person familiar with the situation.
http://jlne.ws/p0pPFI
MF Global Hires Heads of Structured Mortgage, CMBS Trading
By Matthew Leising, Bloomberg
July 26 (Bloomberg) -- MF Global Holdings Ltd., the futures broker that’s transitioning into an investment bank, hired Christopher Belhumeur and Chris Lau to expand trading in structured products and commercial-mortgage backed securities. Belhumeur, 40, previously co-head of agency collateralized mortgage obligations and derivatives at Jefferies Group Inc., began yesterday as head of structured mortgage trading, said Tiffany Galvin, MF Global’s spokeswoman. Lau, 38, who led Gleacher & Co.’s CMBS trading and started at MF Global last week, will assume that role for the company. They will report to Jon Bass, global head of institutional sales and fixed income, Galvin said.
Santander Profit Tumbles On UK Charge; Delays IPOs
By Christopher Bjork, DOW JONES NEWSWIRES
Spanish banking giant Banco Santander SA (STD) Wednesday reported a 38% drop in second-quarter net profit, after it set aside EUR620 million to cover potential claims for customers in the U.K. who were miss-sold payment protection insurance policies. Net profit for the largest bank in the euro-zone by market valuation plunged to EUR1.39 billion from EUR2.23 billion a year earlier. Analysts had on average expected profit of EUR2.07 billion, however they hadn't factored in the surprise U.K. charge.
http://jlne.ws/n2QGz1
CFTC Chairman Gary Gensler Announces Appointment of Tony Thompson as Executive Director
Press Release
Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced the appointment of Tony Thompson to serve as the agency’s Executive Director. Mr. Thompson is the Deputy Administrator for the Office of Management at the U.S. Department of Agriculture’s (USDA) Food Safety and Inspection Service (FSIS). Mr. Thompson will replace Madge Bolinger Gazzola, who recently retired after almost 35 years at the CFTC.
http://jlne.ws/nSxpf7
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt- ceiling standoff with President Barack Obama, worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/rhtXhi
Boehner Fights Internal Strife Over Debt Plan
By Julie Hirschfeld Davis and James Rowley, Bloomberg
House Speaker John Boehner, battling resistance from within his own party as he intensifies a debt- ceiling standoff with President Barack Obama, worked to salvage his plan to tie the nation’s borrowing power to spending cuts and budget controls.
http://jlne.ws/pnXo3a
Companies Bracing for U.S. Default
BY KATE LINEBAUGH AND VIPAL MONGA, WSJ.com
The unthinkable is finally becoming reality for U.S. companies, who are beginning to take real steps to prepare for the possibility of a U.S. debt default. While companies generally expect Washington to resolve the debt-ceiling impasse at the last moment, they are lining up extra sources of financing, and carefully husbanding cash just in case a deal falls through.
http://jlne.ws/qHg9bw
U.S. has 3 days grace before CDS triggered - ISDA
Karen Brettell, Reuters
The United States would have at least three days to make up for any missed debt payments before it triggered payments on its credit default swaps, according to trade association the International Swaps and Derivatives Association.
http://jlne.ws/qzUh7B
The 'Bond Vigilantes' and the Debt Ceiling Crisis: No Need to Panic or Lying in Wait?
PBS
Harvard's eminent trade economist, Robert Lawrence, gave a talk in Greece this month. Among his slides was this image with the headline: "The Vigilantes are Asleep!" That would be the so-called "bond vigilantes" - the investors in the world's bounteous supply of IOUs, with specific reference to the IOUs of the United States - our Treasuries (bonds, notes and bills).
http://jlne.ws/of3VMy
Banks stock up on cash amid US rating fear
By Justin Baer, Tom Braithwaite and Michael Mackenzie in New York
US banks are holding on to more cash and locking in longer-term financing as they brace themselves for the consequences of a potential downgrade of the US’s triple A credit rating. Washington remains deadlocked over the nation’s budget, edging the US closer to a pivotal August 2 deadline to extend its borrowing authority – and prompting financial institutions to plan for a set of scenarios that once seemed remote.
http://jlne.ws/r160Hj
Inflation Expectations Matter
By Michael S. Derby, WSJ.com
An axiom of central banks these days holds that what consumers reckon future inflation will be is an important driver of prices now. Put another way, if the public expects prices to rise in the future, inflation will start to rise now. So Federal Reserve officials have decided understanding, measuring and controlling inflation expectations is a critical part of its mandate to keep inflation stable.
http://jlne.ws/mRKTA7
Infographic: Where America Spent All of Its Money
Forbes
The White House posted the following infographic on its website today explaining how America accumulated its national debt over the past decade, shifting fiscal forecasts from projected surpluses to elephantine deficits.
http://jlne.ws/nGhoKb
SEC Adopts New Short Form Criteria to Replace Credit Ratings
Press Release
Washington, D.C., July 26, 2011 – The Securities and Exchange Commission today voted unanimously to adopt new rules in light of the Dodd-Frank Wall Street Reform and Consumer Protection Act to remove credit ratings as eligibility criteria for companies seeking to use “short form” registration when registering securities for public sale.
http://jlne.ws/pPOaVA
Beige Book: District-by-District Summary
http://jlne.ws/nSKHwM
Growth slows as labor markets ‘soft’
By Steve Goldstein, MarketWatch
Soft labor markets and weak real estate offset a slight boost to consumer spending and an encouraging start to the tourism season, the Federal Reserve reported Wednesday in its Beige Book of anecdotal evidence on the U.S. economy.
http://jlne.ws/pb3uhy
Financial Stability Oversight Council Releases First Annual Report
Press Release
On the heels of the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Financial Stability Oversight Council released its 2011 Annual Report. The report – the first of its kind issued by the U.S. government – was produced collaboratively by the members of the Council and their staff, and unanimously approved by the Council.
http://jlne.ws/qeEwf9
FITCH: U.S. TREASURIES EXPECTED TO REMAIN GLOBAL BENCHMARK
http://jlne.ws/rjU1Jt
Why the credit rating agencies are keeping a close eye on the US
The Telegraph
The switchboard at Congress almost crashed on Tuesday as Americans voiced their anger at the stalemate in Washington over raising the country's $14.3 trillion (£8 trillion) debt ceiling. Here is the verdict of the ratings agencies on the US debt problem.
http://jlne.ws/qbCkAA
German Inflation Rises
BY WILLIAM LAUNDER AND TODD BUELL, WSJ.com
Preliminary consumer-price inflation in Germany rose in July, exceeding economists' forecasts on higher energy prices, the German Federal statistics office said Wednesday.
http://jlne.ws/nB00rU
S&P sees 2nd Greek debt haircut, new downgrade
Reuters
A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor's said on Tuesday, adding a further downgrade of Greece's sovereign debt rating was "pretty certain."
http://jlne.ws/pcoXxV
Goldman Sachs CMBS Trading Head Salem Said to Leave the Bank
By Sarah Mulholland and Jody Shenn, Bloomberg
July 26 (Bloomberg) -- Matthew Salem, head of commercial- mortgage bond trading at Goldman Sachs Group Inc., has left the bank, according to a person familiar with the situation.
http://jlne.ws/p0pPFI
MF Global Hires Heads of Structured Mortgage, CMBS Trading
By Matthew Leising, Bloomberg
July 26 (Bloomberg) -- MF Global Holdings Ltd., the futures broker that’s transitioning into an investment bank, hired Christopher Belhumeur and Chris Lau to expand trading in structured products and commercial-mortgage backed securities. Belhumeur, 40, previously co-head of agency collateralized mortgage obligations and derivatives at Jefferies Group Inc., began yesterday as head of structured mortgage trading, said Tiffany Galvin, MF Global’s spokeswoman. Lau, 38, who led Gleacher & Co.’s CMBS trading and started at MF Global last week, will assume that role for the company. They will report to Jon Bass, global head of institutional sales and fixed income, Galvin said.
Santander Profit Tumbles On UK Charge; Delays IPOs
By Christopher Bjork, DOW JONES NEWSWIRES
Spanish banking giant Banco Santander SA (STD) Wednesday reported a 38% drop in second-quarter net profit, after it set aside EUR620 million to cover potential claims for customers in the U.K. who were miss-sold payment protection insurance policies. Net profit for the largest bank in the euro-zone by market valuation plunged to EUR1.39 billion from EUR2.23 billion a year earlier. Analysts had on average expected profit of EUR2.07 billion, however they hadn't factored in the surprise U.K. charge.
http://jlne.ws/n2QGz1
CFTC Chairman Gary Gensler Announces Appointment of Tony Thompson as Executive Director
Press Release
Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced the appointment of Tony Thompson to serve as the agency’s Executive Director. Mr. Thompson is the Deputy Administrator for the Office of Management at the U.S. Department of Agriculture’s (USDA) Food Safety and Inspection Service (FSIS). Mr. Thompson will replace Madge Bolinger Gazzola, who recently retired after almost 35 years at the CFTC.
http://jlne.ws/nSxpf7
Selasa, 26 Juli 2011
Top Interest Rate Headlines 07-26-11: CME Sends Out Collateral Haircuts Notice; T-Bills No Longer Risk Free
CME Group Collateral Haircuts
As per the normal review of market volatility to ensure adequate collateral coverage, CME Clearing will implement the following collateral haircuts effective with the close of business on Thursday, July 28, 2011.
Asset class: TBILL Current haircut: 0.0% New haircut: 0.5% ...
http://jlne.ws/ovU2XH
U.S. default could spark CDS confusion
http://jlne.ws/ozP338
Tradeweb Launches Electronic European Repo Marketplace
PR Newswire
Tradeweb Markets LLC, a leader in building and operating financial markets, today announced the launch of a European repo marketplace. The electronic dealer-to-customer platform mirrors the existing voice and message-based trading process, while enabling efficient trade execution and substantially simplifying the post-trade complexities of collateral assignment and allocation.
http://jlne.ws/oaxxuO
Deutsche Names Two as Co-CEOs
German Bank Will Pair Indian-Born Jain With German Head Fitschen; Ackermann Moves to Board
BY LAURA STEVENS - WSJ
Straddling its twin roles as a global investment-banking powerhouse and huge German lender, Deutsche Bank AG on Monday resolved months of indecision over its leadership by appointing two top executives to succeed CEO Josef Ackermann.
http://jlne.ws/njOqpt
Infographic on Dodd-Frank
Clarke Camper - Inside the Beltway
In the Atlantic, I just came across this chart by Deloitte that provides a fascinating visual representation of progress in implementing Dodd-Frank: Chart of the Day: The Sluggishness of Financial Regulation.
http://jlne.ws/q70qOd
Soros Returns Client Money to End Four-Decade Hedge-Fund Career
By Katherine Burton, Bloomberg
George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a career as hedge-fund manager that spanned more than four decades.
http://jlne.ws/p82XB9
Moody’s Sees Benefits for Banks From Consumer Bureau
By BEN PROTESS, NY Times
The new Consumer Financial Protection Bureau has ignited fear on Wall Street. But many banks may eventually benefit from the regulator’s careful watch, according to a new report by Moody’s Investors Service.
http://jlne.ws/oniyVd
Treasury May Have 3 Days To Fix A Default Before CDS Trigger
By Katy Burne Of DOW JONES NEWSWIRES
If the U.S. fails to raise its borrowing limit by Aug. 2, when the Treasury Department says it will exhaust its supply of tricks to avoid defaulting on federal debts, it may take a few days for the full shock wave to hit the credit-derivatives market.
http://jlne.ws/nua9aX
Debt Drama Blocks Out Big Picture on Credit
By ANDREW ROSS SORKIN, NY Times
As Washington continues to debate a debt deal, the Obama administration has been preparing the country for the worst, with officials essentially saying the sky is about to fall. But so far, oddly enough, nothing has happened. Despite warnings that a deal would need to be brokered by Sunday night before the Asian markets opened, stocks merely stumbled on Monday — the type of weakness usually associated with soft corporate earnings instead of an economic apocalypse.
http://jlne.ws/oi5jSU
In Greek Debt Deal, Clear Benefits for the Banks
By JACK EWING, Financial Times
Europe's latest plan to prop up Greece looks suspiciously like a plan to bolster European banks. By agreeing to contribute a relatively modest amount to the rescue, the banking industry is getting something more valuable in return, analysts say. The industry is unloading much of its Greek risk onto the European Union and helping to quash fears that the sovereign debt crisis could become a second financial crisis.
http://jlne.ws/nXngLj
UBS to cut costs and rethink fixed income unit
Reuters
Switzerland's UBS will slash jobs and review the future of its fixed income business after the underperforming unit hit second-quarter profits and forced it to push back targets.
http://jlne.ws/r0h71E
U.S. Regulators Seek Public Input for a Joint CFTC-SEC Study on International Swap Regulation
Press Release
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have approved for publication in the Federal Register a request for comment that is expected to assist in conducting a joint study on international swap regulation.
http://jlne.ws/ngnKPN
As per the normal review of market volatility to ensure adequate collateral coverage, CME Clearing will implement the following collateral haircuts effective with the close of business on Thursday, July 28, 2011.
Asset class: TBILL Current haircut: 0.0% New haircut: 0.5% ...
http://jlne.ws/ovU2XH
U.S. default could spark CDS confusion
http://jlne.ws/ozP338
Tradeweb Launches Electronic European Repo Marketplace
PR Newswire
Tradeweb Markets LLC, a leader in building and operating financial markets, today announced the launch of a European repo marketplace. The electronic dealer-to-customer platform mirrors the existing voice and message-based trading process, while enabling efficient trade execution and substantially simplifying the post-trade complexities of collateral assignment and allocation.
http://jlne.ws/oaxxuO
Deutsche Names Two as Co-CEOs
German Bank Will Pair Indian-Born Jain With German Head Fitschen; Ackermann Moves to Board
BY LAURA STEVENS - WSJ
Straddling its twin roles as a global investment-banking powerhouse and huge German lender, Deutsche Bank AG on Monday resolved months of indecision over its leadership by appointing two top executives to succeed CEO Josef Ackermann.
http://jlne.ws/njOqpt
Infographic on Dodd-Frank
Clarke Camper - Inside the Beltway
In the Atlantic, I just came across this chart by Deloitte that provides a fascinating visual representation of progress in implementing Dodd-Frank: Chart of the Day: The Sluggishness of Financial Regulation.
http://jlne.ws/q70qOd
Soros Returns Client Money to End Four-Decade Hedge-Fund Career
By Katherine Burton, Bloomberg
George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a career as hedge-fund manager that spanned more than four decades.
http://jlne.ws/p82XB9
Moody’s Sees Benefits for Banks From Consumer Bureau
By BEN PROTESS, NY Times
The new Consumer Financial Protection Bureau has ignited fear on Wall Street. But many banks may eventually benefit from the regulator’s careful watch, according to a new report by Moody’s Investors Service.
http://jlne.ws/oniyVd
Treasury May Have 3 Days To Fix A Default Before CDS Trigger
By Katy Burne Of DOW JONES NEWSWIRES
If the U.S. fails to raise its borrowing limit by Aug. 2, when the Treasury Department says it will exhaust its supply of tricks to avoid defaulting on federal debts, it may take a few days for the full shock wave to hit the credit-derivatives market.
http://jlne.ws/nua9aX
Debt Drama Blocks Out Big Picture on Credit
By ANDREW ROSS SORKIN, NY Times
As Washington continues to debate a debt deal, the Obama administration has been preparing the country for the worst, with officials essentially saying the sky is about to fall. But so far, oddly enough, nothing has happened. Despite warnings that a deal would need to be brokered by Sunday night before the Asian markets opened, stocks merely stumbled on Monday — the type of weakness usually associated with soft corporate earnings instead of an economic apocalypse.
http://jlne.ws/oi5jSU
In Greek Debt Deal, Clear Benefits for the Banks
By JACK EWING, Financial Times
Europe's latest plan to prop up Greece looks suspiciously like a plan to bolster European banks. By agreeing to contribute a relatively modest amount to the rescue, the banking industry is getting something more valuable in return, analysts say. The industry is unloading much of its Greek risk onto the European Union and helping to quash fears that the sovereign debt crisis could become a second financial crisis.
http://jlne.ws/nXngLj
UBS to cut costs and rethink fixed income unit
Reuters
Switzerland's UBS will slash jobs and review the future of its fixed income business after the underperforming unit hit second-quarter profits and forced it to push back targets.
http://jlne.ws/r0h71E
U.S. Regulators Seek Public Input for a Joint CFTC-SEC Study on International Swap Regulation
Press Release
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have approved for publication in the Federal Register a request for comment that is expected to assist in conducting a joint study on international swap regulation.
http://jlne.ws/ngnKPN
Professor Robert Shiller: "The aggregate economy is at a turning point and there is much uncertainty now."
According to Robert Shiller, professor of economics at Yale University and co-founder of the S&P/Case-Shiller Home Prices Indices, the aggregate economy is "at a turning point and there is much uncertainty now."
Shiller made the comment during a live chat was hosted by S&P Indices on S&P's online site, and was timed with the 9 a.m EST, July 26th release of the May results for the S&P/Case-Shiller Home Price Indices, a measure of single-family residential home prices in the United States.
The May reading of the Case/Shiller Home Price Index posted at -4.51% on a year-over-year basis. Expectations had been for -4.50% year-over-year.
During the chat, Shiller estimated that seasonal factors are growing stronger and may reflect anomalies of the financial crisis. He said seasonality is hard to judge at the current time.
Shiller said the most important metric to watch right now is the recent trend in home prices. Next important would be jobs, and after that survey measures of home buyer confidence, he said.
Shiller noted that the home buyer tax credit expired in early 2010, and that home prices resumed their downward trend after support was withdrawn.
See the entire chat, which included comments from David Blitzer, managing director and chairman of the index committee at S&P Indices, here.
Shiller made the comment during a live chat was hosted by S&P Indices on S&P's online site, and was timed with the 9 a.m EST, July 26th release of the May results for the S&P/Case-Shiller Home Price Indices, a measure of single-family residential home prices in the United States.
The May reading of the Case/Shiller Home Price Index posted at -4.51% on a year-over-year basis. Expectations had been for -4.50% year-over-year.
During the chat, Shiller estimated that seasonal factors are growing stronger and may reflect anomalies of the financial crisis. He said seasonality is hard to judge at the current time.
Shiller said the most important metric to watch right now is the recent trend in home prices. Next important would be jobs, and after that survey measures of home buyer confidence, he said.
Shiller noted that the home buyer tax credit expired in early 2010, and that home prices resumed their downward trend after support was withdrawn.
See the entire chat, which included comments from David Blitzer, managing director and chairman of the index committee at S&P Indices, here.
Senin, 25 Juli 2011
Top Interest Rate Headlines: 07-25-11: Rival Debt Plans Unveiled As Deadline Nears
US debt limit: Rival plans unveiled as deadline nears
BBC News
Senate Democrats and House Republicans have unveiled competing plans to cut the US budget deficit and raise its debt limit to avoid a default.
http://jlne.ws/pO9KnJ
House Leaders Call for Short-Term Rise in Debt Ceiling
The New York Times
House Republicans intend to push for a vote this week on a two-step plan that would allow the federal debt limit to immediately rise by about $1 trillion and tie a second increase next year to the ability of a new joint Congressional committee to produce more deficit reduction.
http://jlne.ws/oE30Lv
Cost of Treasury futures set to rise
http://jlne.ws/ngGGtH
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI And MARCUS WALKER, WSJ.com
European bond markets fell on Monday after Moody's Investors Service cut Greece's credit rating three notches deeper into junk territory, warning that the country's latest bailout deal implies a default.
http://jlne.ws/ow2pJH
Deutsche Eyes Jain for Co-CEO Post
By LAURA STEVENS, WSJ.com
Anshu Jain, Deutsche Bank AG's Indian-born, London-based head of investment banking, looks set to take over as joint chief executive and become the real power at Germany's most powerful bank, according to people familiar with the matter.
http://jlne.ws/nSJ1Gq
China's urban unemployment rate stands at 4.1% at June end
People's Daily Online
China's registered urban unemployment rate stood at 4.1 percent at the end of June, with 9.08 million people being registered to be unemployed, the Ministry of Human Resources and Social Security said on Monday.
http://jlne.ws/raQqgl
Weekly T-Bills Go At 0.060%, 0.100%
The Bond Buyer
Tender rates for the Treasury Department’s latest 91-day and 182-day discount bills were higher, as the three-months incurred a 0.060% high rate, up from 0.020% the prior week, and the six-months incurred a 0.100% high rate, up from 0.060% the week before.
http://jlne.ws/pDfFAz
FINRA Warns Investors About Chasing Returns in Structured Products, High-Yield Bonds and Floating-Rate Loan Funds
Press Release
The Financial Industry Regulatory Authority (FINRA) today issued an Investor Alert warning investors about putting their assets into riskier and sometimes complex products that promise higher returns than more traditional investments. With yields on many fixed-income investments at historically low levels and a volatile stock market, investors may be tempted to chase returns by investing in structured notes with principal protection, high-yield bonds, floating-rate loan funds and leveraged products.
http://jlne.ws/ocb0Wd
Moody's warns Greek default almost certain
Reuters
Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.
http://jlne.ws/qufWOb
Gold hits record as U.S. debt talks grind on
By Claudia Assis and Virginia Harrison, MarketWatch
Gold futures traded in record territory Monday as U.S. debt-ceiling talks to avert a default continued, with little to indicate progress toward a deal, and as a debt-ratings agency further downgraded Greece.
http://jlne.ws/qh0KOS
Goldman Succession May Be Hurdle for Cohn
By Max Abelson and Christine Harper, Bloomberg
Michael Ovitz, the former Hollywood agent whose company was said to have created enemies “the way a hurricane produces raindrops,” first met Gary Cohn over lunch at Goldman Sachs Group Inc. (GS)’s headquarters in June 2009.
http://jlne.ws/pDmkXP
Free-marketeers and inflation: Missing Milton Friedman
The Economist
TIM LEE asks an important question: why are conservatives and libertarians so uniformly hawkish about inflation? Mr Lee (a friend and former colleague) notes that this regularity is far from inevitable. Milton Friedman, a revered figure in right-of-centre circles, famously pinned the severity of the Great Depression on contractionary monetary policy. Scott Sumner, a professor of economics at Bentley University who identifies himself as a "neo-monetarist", has argued that Friedman would have supported monetary stimulus. And he has argued, on neo-Friedmanite grounds, that tight monetary policy both precipitated and exacerbated our recent recession.
http://jlne.ws/rsSeJI
Policymakers must reduce reliance on credit ratings
By Deven Sharma, Financial Times
What is the appropriate role of independent credit ratings in the financial system? That is the question raised by recent events in the eurozone and one that has prompted a flurry of suggestions from European policymakers, from intervening in ratings methodologies to suspending certain sovereign ratings.
http://jlne.ws/n2YFlA
U.S. Default Bets Eclipsed By Super Bowl Wagers: Credit Markets
By Shannon D. Harrington and Abigail Moses, Bloomberg
Credit-default swaps traders seeking to profit from concern that the U.S. will default as lawmakers clash over the debt ceiling are betting a missed payment may trigger a payout of about 22 times the cost of the contracts.
http://jlne.ws/nlvSrk
Collateral Rules Criticized
BY AARON LUCCHETTI, WSJ
Some lawmakers and financial firms are resisting rules being written to implement last year's Dodd-Frank law that could require banks to set aside more collateral when they make certain trades in the derivatives market.
http://jlne.ws/q7Wd33
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI, WSJ
SINGAPORE—Moody's Investors Service Monday slashed the Greek government's debt ratings three notches deeper into junk territory, warning that the nation's newest bailout deal implies a temporary sovereign default and sets a bad precedent in the 17-country euro zone.
http://jlne.ws/paxPw5
Central Bank May Be Winner in Europe’s Debt Talks
By JACK EWING, NY Times
FRANKFURT — Chancellor Angela Merkel of Germany and other European leaders appeared to act in defiance of the European Central Bank when they insisted that banks contribute to the latest rescue plan for Greece. But the central bank president, Jean-Claude Trichet, may consider himself the real winner of the week.
http://jlne.ws/p9bN2C
Investors to Buy Into Bank of Ireland
BY EAMON QUINN, WSJ
DUBLIN—Investors plan to buy a large stake in Bank of Ireland PLC, helping to keep the country's largest lender out of majority government ownership, Irish Finance Minister Michael Noonan said Monday.
http://jlne.ws/nh2IFj
Bank of China a likely buyer for RBS jet unit: report
Reuters
Bank of China is a leading contender in the race to acquire the aircraft leasing business being sold off by Royal Bank of Scotland , the Sunday Times reported without citing sources.
http://jlne.ws/rfdm2s
BBC News
Senate Democrats and House Republicans have unveiled competing plans to cut the US budget deficit and raise its debt limit to avoid a default.
http://jlne.ws/pO9KnJ
House Leaders Call for Short-Term Rise in Debt Ceiling
The New York Times
House Republicans intend to push for a vote this week on a two-step plan that would allow the federal debt limit to immediately rise by about $1 trillion and tie a second increase next year to the ability of a new joint Congressional committee to produce more deficit reduction.
http://jlne.ws/oE30Lv
Cost of Treasury futures set to rise
http://jlne.ws/ngGGtH
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI And MARCUS WALKER, WSJ.com
European bond markets fell on Monday after Moody's Investors Service cut Greece's credit rating three notches deeper into junk territory, warning that the country's latest bailout deal implies a default.
http://jlne.ws/ow2pJH
Deutsche Eyes Jain for Co-CEO Post
By LAURA STEVENS, WSJ.com
Anshu Jain, Deutsche Bank AG's Indian-born, London-based head of investment banking, looks set to take over as joint chief executive and become the real power at Germany's most powerful bank, according to people familiar with the matter.
http://jlne.ws/nSJ1Gq
China's urban unemployment rate stands at 4.1% at June end
People's Daily Online
China's registered urban unemployment rate stood at 4.1 percent at the end of June, with 9.08 million people being registered to be unemployed, the Ministry of Human Resources and Social Security said on Monday.
http://jlne.ws/raQqgl
Weekly T-Bills Go At 0.060%, 0.100%
The Bond Buyer
Tender rates for the Treasury Department’s latest 91-day and 182-day discount bills were higher, as the three-months incurred a 0.060% high rate, up from 0.020% the prior week, and the six-months incurred a 0.100% high rate, up from 0.060% the week before.
http://jlne.ws/pDfFAz
FINRA Warns Investors About Chasing Returns in Structured Products, High-Yield Bonds and Floating-Rate Loan Funds
Press Release
The Financial Industry Regulatory Authority (FINRA) today issued an Investor Alert warning investors about putting their assets into riskier and sometimes complex products that promise higher returns than more traditional investments. With yields on many fixed-income investments at historically low levels and a volatile stock market, investors may be tempted to chase returns by investing in structured notes with principal protection, high-yield bonds, floating-rate loan funds and leveraged products.
http://jlne.ws/ocb0Wd
Moody's warns Greek default almost certain
Reuters
Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.
http://jlne.ws/qufWOb
Gold hits record as U.S. debt talks grind on
By Claudia Assis and Virginia Harrison, MarketWatch
Gold futures traded in record territory Monday as U.S. debt-ceiling talks to avert a default continued, with little to indicate progress toward a deal, and as a debt-ratings agency further downgraded Greece.
http://jlne.ws/qh0KOS
Goldman Succession May Be Hurdle for Cohn
By Max Abelson and Christine Harper, Bloomberg
Michael Ovitz, the former Hollywood agent whose company was said to have created enemies “the way a hurricane produces raindrops,” first met Gary Cohn over lunch at Goldman Sachs Group Inc. (GS)’s headquarters in June 2009.
http://jlne.ws/pDmkXP
Free-marketeers and inflation: Missing Milton Friedman
The Economist
TIM LEE asks an important question: why are conservatives and libertarians so uniformly hawkish about inflation? Mr Lee (a friend and former colleague) notes that this regularity is far from inevitable. Milton Friedman, a revered figure in right-of-centre circles, famously pinned the severity of the Great Depression on contractionary monetary policy. Scott Sumner, a professor of economics at Bentley University who identifies himself as a "neo-monetarist", has argued that Friedman would have supported monetary stimulus. And he has argued, on neo-Friedmanite grounds, that tight monetary policy both precipitated and exacerbated our recent recession.
http://jlne.ws/rsSeJI
Policymakers must reduce reliance on credit ratings
By Deven Sharma, Financial Times
What is the appropriate role of independent credit ratings in the financial system? That is the question raised by recent events in the eurozone and one that has prompted a flurry of suggestions from European policymakers, from intervening in ratings methodologies to suspending certain sovereign ratings.
http://jlne.ws/n2YFlA
U.S. Default Bets Eclipsed By Super Bowl Wagers: Credit Markets
By Shannon D. Harrington and Abigail Moses, Bloomberg
Credit-default swaps traders seeking to profit from concern that the U.S. will default as lawmakers clash over the debt ceiling are betting a missed payment may trigger a payout of about 22 times the cost of the contracts.
http://jlne.ws/nlvSrk
Collateral Rules Criticized
BY AARON LUCCHETTI, WSJ
Some lawmakers and financial firms are resisting rules being written to implement last year's Dodd-Frank law that could require banks to set aside more collateral when they make certain trades in the derivatives market.
http://jlne.ws/q7Wd33
Moody's Cuts Greek Debt Rating Further
By NATASHA BRERETON-FUKUI, WSJ
SINGAPORE—Moody's Investors Service Monday slashed the Greek government's debt ratings three notches deeper into junk territory, warning that the nation's newest bailout deal implies a temporary sovereign default and sets a bad precedent in the 17-country euro zone.
http://jlne.ws/paxPw5
Central Bank May Be Winner in Europe’s Debt Talks
By JACK EWING, NY Times
FRANKFURT — Chancellor Angela Merkel of Germany and other European leaders appeared to act in defiance of the European Central Bank when they insisted that banks contribute to the latest rescue plan for Greece. But the central bank president, Jean-Claude Trichet, may consider himself the real winner of the week.
http://jlne.ws/p9bN2C
Investors to Buy Into Bank of Ireland
BY EAMON QUINN, WSJ
DUBLIN—Investors plan to buy a large stake in Bank of Ireland PLC, helping to keep the country's largest lender out of majority government ownership, Irish Finance Minister Michael Noonan said Monday.
http://jlne.ws/nh2IFj
Bank of China a likely buyer for RBS jet unit: report
Reuters
Bank of China is a leading contender in the race to acquire the aircraft leasing business being sold off by Royal Bank of Scotland , the Sunday Times reported without citing sources.
http://jlne.ws/rfdm2s
Jumat, 22 Juli 2011
Top Interest Rate Headlines 07-22-2011: Bank Plan For Greece Won't Cause CDS Payout: ISDA
Bank plan for Greece won't cause CDS payout: ISDA
Reuters
International bank plans for a voluntary program of debt swaps and buybacks to help rescue Greece won't trigger a "credit event" and payment of CDS contracts, derivatives body ISDA told Reuters on Friday, limiting the fallout of any default rating.
http://jlne.ws/rlBTKy
Fitch warns Greece of ‘selective default’
By David Oakley in London - Financial Times
Greece faces default after the European Union’s second bail-out for Athens as it includes making bondholders assume part of the cost, Fitch said on Friday. The ratings agency said it would reduce Greece as an issuer of bonds to “restricted default” should plans to roll over debt or implement debt swaps go ahead.
http://jlne.ws/p9ICk9
EU leaders agree E109bn Greek bail-out
By Peter Spiegel and Quentin Peel in Brussels, and Patrick Jenkins and Richard Milne in London - Financial Times
European leaders have agreed a new E109bn bail-out of Greece under which private bondholders will be called on to participate for the first time, contributing a target of a further E37bn.
http://jlne.ws/pT8wJl
U.K. Treasury to Stick to Fiscal Tightening, Minister Insists
By ALISTAIR MACDONALD And DAVID ENRICH - WSJ
The U.K. Treasury is digging in its heels when it comes to its deficit-reduction plans, insisting it won't reconsider them even if Europe's financial crisis significantly intensifies, a U.K. Treasury minister said Thursday.
http://jlne.ws/rhAT3q
Barnier seeks to soothe UK over banks
By Brooke Masters and Patrick Jenkins in London - Financial Times
The UK would still be able to ringfence its retail banks and impose extra capital requirements on them under the proposed European Union regulations that seek to harmonise capital rules across the 27-member bloc, Michel Barnier, EU’s internal market commissioner, told the Financial Times.
http://jlne.ws/qHLaRw
CME Globex Enhancements for Interest Rate Products
Press Release
Effective August 2011, a number of CME Globex enhancements for CBOT and CME Interest Rate futures products will be introduced. The changes to our CBOT interest rate products will take place on Sunday, August 7, 2011 (trade date August 8) and to CME products on Sunday, August 21, 2011 (trade date August 22).
Big banks to attend eurozone summit: report
DW-World
Deutsche Bank CEO Josef Ackermann and other European banking sector heavyweights have been invited to the latest eurozone summit to discuss new strategies for handling the Greek debt crisis.
http://jlne.ws/qnGkuF
Global Commission Management Update: No Credit Too Small
Press Release
London, 21 July, 2011 – A new report from Aite Group examines the key trends that have developed in the commission management industry since the 2006 implementation of new regulation in the United States and U.K. The report also explores the adoption of commission management in the European and Asian markets, and major commission management initiatives provided by full-service and agency brokers.
http://jlne.ws/oJ4dH7
Reuters
International bank plans for a voluntary program of debt swaps and buybacks to help rescue Greece won't trigger a "credit event" and payment of CDS contracts, derivatives body ISDA told Reuters on Friday, limiting the fallout of any default rating.
http://jlne.ws/rlBTKy
Fitch warns Greece of ‘selective default’
By David Oakley in London - Financial Times
Greece faces default after the European Union’s second bail-out for Athens as it includes making bondholders assume part of the cost, Fitch said on Friday. The ratings agency said it would reduce Greece as an issuer of bonds to “restricted default” should plans to roll over debt or implement debt swaps go ahead.
http://jlne.ws/p9ICk9
EU leaders agree E109bn Greek bail-out
By Peter Spiegel and Quentin Peel in Brussels, and Patrick Jenkins and Richard Milne in London - Financial Times
European leaders have agreed a new E109bn bail-out of Greece under which private bondholders will be called on to participate for the first time, contributing a target of a further E37bn.
http://jlne.ws/pT8wJl
U.K. Treasury to Stick to Fiscal Tightening, Minister Insists
By ALISTAIR MACDONALD And DAVID ENRICH - WSJ
The U.K. Treasury is digging in its heels when it comes to its deficit-reduction plans, insisting it won't reconsider them even if Europe's financial crisis significantly intensifies, a U.K. Treasury minister said Thursday.
http://jlne.ws/rhAT3q
Barnier seeks to soothe UK over banks
By Brooke Masters and Patrick Jenkins in London - Financial Times
The UK would still be able to ringfence its retail banks and impose extra capital requirements on them under the proposed European Union regulations that seek to harmonise capital rules across the 27-member bloc, Michel Barnier, EU’s internal market commissioner, told the Financial Times.
http://jlne.ws/qHLaRw
CME Globex Enhancements for Interest Rate Products
Press Release
Effective August 2011, a number of CME Globex enhancements for CBOT and CME Interest Rate futures products will be introduced. The changes to our CBOT interest rate products will take place on Sunday, August 7, 2011 (trade date August 8) and to CME products on Sunday, August 21, 2011 (trade date August 22).
Big banks to attend eurozone summit: report
DW-World
Deutsche Bank CEO Josef Ackermann and other European banking sector heavyweights have been invited to the latest eurozone summit to discuss new strategies for handling the Greek debt crisis.
http://jlne.ws/qnGkuF
Global Commission Management Update: No Credit Too Small
Press Release
London, 21 July, 2011 – A new report from Aite Group examines the key trends that have developed in the commission management industry since the 2006 implementation of new regulation in the United States and U.K. The report also explores the adoption of commission management in the European and Asian markets, and major commission management initiatives provided by full-service and agency brokers.
http://jlne.ws/oJ4dH7
Kamis, 21 Juli 2011
July 21, 2011: Wall St. Makes Fallback Plans for Debt Crisis [NEWSLETTER]
July 21, 2011
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
ISDA Marks First Anniversary Of Dodd-Frank Act: Clearing, Transparency Drive Improvements In OTC Derivatives Markets
Press Release
NEW YORK, Thursday, July 21, 2011 – At the first anniversary of the Dodd-Frank Act, market participants, policymakers and others are assessing the safety of the over-the-counter (OTC) derivatives markets in light of the legislation as well as efforts the industry has undertaken over the past few years in conjunction with global regulators. The International Swaps and Derivatives Association, Inc. (ISDA) believes the markets are safer and more efficient today, as evidenced by the following:
1) More OTC derivatives are being cleared.
2) The industry continues to reduce the level of notional outstanding through its compression efforts.
3) ISDA and the industry have selected vendors to act as trade repositories for all the major asset classes to report trade activity to global regulators.
"ISDA strongly supports efforts to make the OTC derivatives markets safer and more efficient," said Conrad Voldstad, ISDA chief executive officer. "With regard to Dodd-Frank, we believe its implementation should be centered initially on safety and soundness issues. Let's finalize the clearing rules and get the
trade repositories in place."
ISDA believes that regulations that dramatically change the method of executing business should be done carefully and over time. It is the proposed rules regarding electronic execution and extraterritoriality that most concern users and dealers alike. ISDA is not convinced the costs imposed by the rules and the likely resulting reduction in liquidity are justified at this time, especially since imposition of these requirements will likely drive business to other jurisdictions.
**CN: See the full ISDA release here.
Related Stories:
US Deputy Secretary Of The Treasury, Neal Wolin, On The Dodd-Frank Act, One Year Later
On the one-year anniversary of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Deputy Treasury Secretary will be on Capitol Hill this morning testifying before the Senate Banking Committee. He will focus on how Dodd-Frank’s core reforms are strengthening safeguards for consumers and investors, and providing the necessary tools for limitingrisk in the financial markets. "These reforms were an obligation, not a choice. Without them, we could not build the financial system we need—a financial system with the stability and the resilience necessary to support our economy and protect it in times of stress," Wolin says in submitted testimony. "Our country needs a financial system that is stronger and more robust, and also promotes innovation, fosters growth, and creates jobs—a system that channels capital effectively to businesses and to consumers."
http://jlne.ws/pxPj51
NCUA's Matz Cites Stronger, Safer Financial System
ALEXANDRIA, Va. (July 21, 2011) – National Credit Union Administration (NCUA) Board Chairman Debbie Matz commented at the start of today’s Board meeting about the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The comments of Chairman Matz follow:
“As we begin this Board meeting, I want to take a few moments to comment on the Dodd-Frank Act, which became law one year ago today. In reflecting on this milestone, we should remember why we needed to act to restore the public’s trust in our financial system and what has happened since the bill became law. Years of excess, greed, and financial mischief resulted in a severe financial crisis that took our economy into a deep recession. Americans were justifiably scared. We needed to change the rules for our financial markets by better protecting consumers, regulating the unregulated, and controlling Wall Street’s biggest institutions. The result was the Dodd-Frank Act. During the last year, NCUA has focused on completing the many credit union reforms required by this landmark law. It is therefore fitting that we will consider another mandated change at today’s Board meeting—the interim final rule on remittance transfers. In the last year, the Dodd-Frank Act has also begun to achieve its desired results of promoting a stronger, safer, more stable financial system. The actions of NCUA and other regulators, together and independently, are correcting many of the weaknesses laid bare by the financial crisis...
http://1.usa.gov/ieZ9VY
Swaps Rules Will Be Delayed Without More Funding - SEC's Schapiro
By Jessica Holzer and Jamila Trindle Of DOW JONES NEWSWIRES
The implementation of a new regulations for the $600 trillion over-the-counter derivatives market will be further delayed unless the U.S. Securities and Exchange Commission gets a budget boost, SEC Chairman Mary Schapiro said in prepared testimony to a Senate panel.
http://jlne.ws/qePI7z
Dodd-Frank financial reform law hasn't curtailed banks' profits
Los Angeles Times
Banking executives argued vehemently against Dodd-Frank a year ago, saying it would erode earnings. But in the last two weeks, banks have reported billions of dollars in profits. Just a year ago, banking executives argued vehemently against the most sweeping overhaul of financial regulations since the Great Depression, saying the law enacted then would stifle innovation and erode profits.
http://jlne.ws/nCbZvU
Little to celebrate on Dodd-Frank’s birthday
By Hal Scott, Financial Times
America’s Dodd-Frank act is one year old on Thursday. The act made some useful corrections in the regulation of American financial markets, but it has failed to respond effectively to the root causes of the financial crisis and its impact on the global financial system. In the short term, it has hindered economic recovery. Worse, in the longer term, it has actually made future crises more likely, while potentially damaging the international competitiveness of America’s financial institutions.
http://jlne.ws/pJXRWi
CFTC Finalizes 3 More Derivatives Rules
Dow Jones
The Commodity Futures Trading Commission unanimously approved three more new derivatives rules Tuesday, bringing the number of final rules required by the Dodd-Frank law to 10, out of over 50 proposed rules. Last year's Dodd-Frank financial overhaul law charged the CFTC and the Securities and Exchange Commission with writing new rules to create a new regulatory regime for over-the-counter derivatives called swaps. The law's one-year anniversary is Thursday, by which time most of the new rules were supposed to be written, but the commission acted last month to delay some of the law's requirements for as long as six months. The Dodd-Frank law aims to make as many swaps as possible trade on open platforms and go through clearinghouses.
Regulators Weigh Changes To Bank Ownership Caps In Swaps Venues
By Jacob Bunge and Katy Burne, DOW JONES
Regulators are reconsidering proposals that would limit the amount of voting power dealer banks have in derivatives clearinghouses and swaps trading platforms, worried that draft rules went too far, according to people involved in the discussions. A proposal last fall from the Commodity Futures Trading Commission would have allowed up to one-fifth of voting equity to be held by any individual member in a clearinghouse or swap execution facility.
http://jlne.ws/nmXDsf
Lead Stories
Wall St. Makes Fallback Plans for Debt Crisis
By LOUISE STORY and JULIE CRESWELL, NY Times
Lawmakers in Washington are racing to reach a deal to save the country from defaulting on its debt, but financial players are devising doomsday plans in case the clock runs out.
http://jlne.ws/p2yqKy
Audit of Fed finds conflict-of-interest weakness
By Greg Robb and Ronald D. Orol, MarketWatch
A long-awaited audit of the Federal Reserve’s emergency lending programs recommended several areas that need reform, including the central bank’s conflict-of-interest policies.
Debt fears lead to US downgrade
By Michael Mackenzie in New York, Financial Times
Egan-Jones has become the first US rating agency to downgrade the country’s sovereign credit rating from triple A to double A plus as it focuses on the rapid rise in outstanding debt over the past five years.
http://jlne.ws/oDKu3c
Some investors likely to bail if U.S. rating cut
MarketWatch
Wall Street's leading trade association waded into the debt-ceiling debate Tuesday, warning that a U.S. credit-rating downgrade would be a shock to the markets.
http://jlne.ws/oVQwe8
S and P Threatens Broad Downgrade of Finance Companies
CNBC
Standard and Poor's Friday put a broad range of financial firms on negative credit watch, warning they could all be downgraded if the United States
has its credit rating cut.
http://jlne.ws/mRU5ej
Fitch: Rating Linkages to the U.S. Sovereign Rating A Sector and Transaction Analysis
Report - Registration required
http://jlne.ws/mOI8kr
Debt ceiling scuffle already hurting economy
Reuters
When U.S. President Barack Obama warns about the possible damage to economic growth from a failure to lift the debt ceiling, he usually speaks about it in the future tense. So does Federal Reserve Chairman Ben Bernanke who, when asked about the issue in congressional testimony last week, said “it certainly could slow the economy.”
http://jlne.ws/p4cUK5
**CN: "Debt ceiling scuffle" sounds a bit like a dance. It's probably not easy to do without stepping on someone else's toes.
Tim Geithner: Sides are moving closer on debt deal
By JENNIFER EPSTEIN, Politico
Treasury Secretary Timothy Geithner said on Monday there’s progress on the debt talks and he is “absolutely” certain that President Barack Obama and congressional Republicans will be able to reach a deal to raise the ceiling ahead of the August 2 deadline.
http://jlne.ws/nB5Pxk
Draft deal for Greece includes fund overhaul
By Gabriele Steinhauser, Associated Press
A draft of a deal on a new bailout for Greece foresees an overhaul the eurozone's bailout fund in an attempt to stop the debt crisis from engulfing larger countries like Spain or Italy.
http://jlne.ws/oNMSJ1
French-German Proposal for Europe Emerges Before a Meeting on Greece
By STEPHEN CASTLE AND JUDY DEMPSEY, The New York Times
The leaders of Germany and France agreed late Wednesday on a proposal for a rescue plan for Greece to be presented to a summit meeting of European officials on Thursday, a statement from the French president said.
http://jlne.ws/mUG5GQ
ECB said to accept temporary Greek default in rescue
By Gernot Heller and Luke Baker, Reuters
The European Central Bank is willing to let Greece slip into temporary default as part of a crisis response that would involve a bond buyback but no new tax on banks, EU sources said on Thursday.
http://jlne.ws/njxuDR
Fed should do more if US economy doesn't improve-Evans
By Ann Saphir, Reuters
If the U.S. economy does not show signs of sustainable improvement this quarter, the Federal Reserve should dig into its toolbox to find new ways to help it along, a top Fed official said on Thursday.
http://jlne.ws/qKXuA7
8 Banks Fail EU 'Stress Tests'
BY DAVID ENRICH, WSJ.com
European regulators, trying to douse the Continent's financial crisis, unveiled the results of their banking "stress tests," but the small number of lenders that flunked the exams provoked skepticism.
http://jlne.ws/qZiQGm
Politicians Can't Agree on Debt? Well, Neither Can Economists
CNBC
The politicians grappling over how to pay the nation’s debts have been contributing to the heat of summer with back-and-forth charges that their opponents are disregarding the laws of economics.
http://jlne.ws/nnFmOu
Obama Picks Consumer Bureau Leader
The Daily Beast
It looks as though Elizabeth Warren will be headed back to Harvard: President Obama has picked Richard Cordray, the former attorney general of Ohio, to lead the Consumer Financial Protection Bureau.
http://jlne.ws/oidTLE
Obama laying out why he didn't press harder for Simpson-Bowles
By Jeanne Sahadi, CNNMoney
Last December, the bipartisan debt reduction commission that President Obama created put out a series of recommendations supported by a majority of its members.
http://bit.ly/p0pk2W
Investors Break Their Bonds to Ratings Agencies
Reuters
Some of the world's largest asset managers are cutting ties to credit rating agencies, potentially signaling the beginning of the end of their grip on global financial markets.
http://jlne.ws/nnCZnN
S and P: U.S. Debt Cut May Cascade to Other Entities
Reuters
A wide assortment of U.S. entities directly linked or reliant on the federal government's credit rating might suffer a ``knock-on'' effect and be downgraded if the nation loses its AAA rating, Standard & Poor's said in a statement Friday.
http://jlne.ws/o5w5GB
Sovereign Debt Weakens European Banks
New York Times
The latest bank stress test revealed how exposed banks are to the government bonds of Greece, Portugal, Spain and Italy.
http://jlne.ws/ovBR87
Southern Exposure for Europe Banks
BY DAVID ENRICH , WSJ
Europe's banks are sitting on vast quantities of loans to individuals and businesses in cash-strapped Southern European countries, highlighting how plain-vanilla loans, not just government debt, pose potential risks to the Continent's troubled banking system.
http://jlne.ws/p5Zcni
Fed Members Release Financial Reports
By Jeffrey Sparshott and Andrew Ackerman
Federal Reserve Vice Chairman Janet Yellen stands as potentially the wealthiest member of the central bank’s board of governors since joining in
October.
http://jlne.ws/nfY7gT
Events
Credit Risk in Emerging Markets
August 1, 2011
www.theIFM.org
Making Sense of Credit Default Swaps
August 10, 2011
www.theIFM.org
FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
Economic News
July 2011 Business Outlook Survey - Indicators Suggest Activity Is Near Steady - Philadelphia Fed
Federal Reserve Bank of Philadelphia
Responses to the Business Outlook Survey suggest that regional manufacturing activity remained weak in July. The survey's indicators for activity and new orders, which had turned negative last month, recovered somewhat but are at very low positive readings. Firms indicated that employment grew modestly while the average workweek lessened. Indexes for prices show a continuing trend of moderating price pressures. The broadest indicator of future activity improved markedly this month, rebounding from its lowest reading in 31 months in June.
http://jlne.ws/ox3B0X
Leading economic index rises 0.3 percent in June
Reuters
A key gauge of future economic activity rose less than expected in June as headwinds from the debt ceiling debate and recent floods and tornado damage in some regions of the country kept growth moderate, the independent Conference Board said on Thursday.
http://jlne.ws/qXhvZz
Housing starts hit 6-month high
Reuters
Housing starts rose more than expected in June to touch a six-month high and permits for future construction unexpectedly increased, a government report showed on Tuesday, likely reflecting growing demand for rental apartments.
http://jlne.ws/nqQwn8
Consumer Spending: The Chicken or the Egg
By DAVID LEONHARDT, The New York Times
Yet more on the consumer bust, this time from David Backus (via Andrew Gelman): The suggestion … is that the economy is growing slowly because consumers aren’t spending money. But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. As a teacher, I can tell you that it’s almost impossible to get students to understand that the first statement isn’t obviously true. What I’d call the demand-side story (more spending leads to more output) is everywhere, including this piece, from the usually reliable David Leonhardt.
http://jlne.ws/rnCTAd
Homebuilder Confidence in U.S. Rose in July
By Bob Willis, Bloomberg
Confidence among U.S. homebuilders improved in July from a nine-month low as executives turned less pessimistic on the outlook for sales.
http://jlne.ws/rgcVZC
Industrial Production in U.S. Climbs 0.2%
By Bob Willis, Bloomberg
Industrial production in the U.S. rose less than forecast in June, restrained by declines in the output of autos and business equipment.
http://jlne.ws/n7ff5g
CPI: Inflation retreats on lower gas prices
CNN Money
Falling prices at the pump pushed inflation lower in June, but consumers are still paying significantly more than they were last summer.
http://jlne.ws/q2lseD
Exchanges, Clearing Houses & MTFs
For CME Group, uncertainty is a two-edged blade
By Ann Saphir, Reuters
Uncertainty is proving a two-edged sword for CME Group Inc . Worries over a debt crisis have lit a fire under CME's interest-rate futures markets, as investors turn to contracts at the Chicago Board of Trade and the Chicago Mercantile Exchange to protect their portfolios from market gyrations, a top CME official said on Wednesday.
http://jlne.ws/pwVKCX
NYSE Bonds Distributing Markets Via Bonds.com Platform
Press Release
Bonds.com Group, Inc. (OTC.BB:BDCG) today announced that it has entered an agreement with NYSE Euronext (NYX) to make NYSE Bonds orders executable via its BondsPro trading platform, effective on July 13, 2011.
http://jlne.ws/qfqzJG
NYSE Euronext Appoints John Spiegel as Vice President, Interest Rate Business Development for NYSE Liffe U.S.
NYSE Euronext (NYX) today announced that John Spiegel has been appointed as Vice President, Interest Rate Business Development, for NYSE Liffe U.S. In this Chicago-based role, Mr. Spiegel is responsible for expanding the NYSE Liffe U.S. interest rate futures complex by continuing to create and develop strong customer relationships across the spectrum of key market participants, including banks, asset managers, FCMs, and inter-dealer brokers. He will report to Marco Bianchi, Senior Vice President, Head of Business Development, NYSE Liffe U.S.
http://jlne.ws/p7WjJW
DTCC Bolsters Its Global Funds Processing Business With New Hire - Industry Veteran Joins DTCC’s Wealth Management Services Team, Strengthening The Company’s Ability To Bring Certainty And Reliability To The Offshore Mutual Funds Marketplace
Press Release
The Depository Trust and Clearing Corporation (DTCC) announced yesterday the appointment of Gail Weiss as vice president and head of global business development, Wealth Management Services, to further strengthen its global funds processing business.
http://jlne.ws/oSTph7
LCH.Clearnet’s SwapClear Clears OTC Interest Rate Swaps For Friesland Bank Through ABN AMRO Clearing - First Client To Clear OTC IRS
Transactions In The Netherlands
Press Release
Friesland Bank, ABN AMRO Clearing Bank N.V. (ABN AMRO Clearing) and LCH.Clearnet Ltd (LCH.Clearnet), today announced that Friesland Bank has signed up to LCH.Clearnet’s SwapClear service to clear OTC interest rate swap (IRS) transactions through ABN AMRO Clearing. Friesland Bank is the first Dutch client to benefit from SwapClear’s proven risk management experience.
http://jlne.ws/n2syUG
ICE credit clearer bulks up, gets Dodd-Frank ready
By Jonathan Spicer, Reuters
IntercontinentalExchange Inc's U.S. clearinghouse for credit derivatives, known as ICE Trust US, will add nearly a dozen formal users and become a new entity approved by the Dodd-Frank financial overhaul.
http://jlne.ws/rj9QVi
NYSE Bonds Distributing Markets via Bonds.com Platform
Bonds.Com Group, Inc. (OTC.BB: BDCG) today announced that it has entered an agreement with NYSE Euronext (NYX) to make NYSE Bonds orders executable via its BondsPro trading platform, effective on July 13, 2011.
http://jlne.ws/qTbOps
Start-Up Targets Price Transparency in Bonds, Derivatives
BY KATY BURNE, Dow Jones
A technology start-up called Benchmark Solutions introduced a service Monday offering investors a way to assess if dealers are offering them a fair price on fixed-income and derivatives trades. The company, started by the co-founder of electronic bond and swaps trading platform Tradeweb Markets LLC and backed by private-equity giant Warburg Pincus LLC, promises to try to bring the same level of price transparency to credit markets that exists in the stock markets.
http://jlne.ws/peXCsZ
ICE credit clearer bulks up, gets Dodd-Frank ready
By Jonathan Spicer, Reuters
IntercontinentalExchange Inc's (ICE.N) U.S. clearinghouse for credit derivatives, known as ICE Trust US, will add nearly a dozen formal users and become a new entity approved by the Dodd-Frank financial overhaul. The clearinghouse, which will be renamed ICE Clear Credit, added 11 bank units as formal "clearing participants," bulking up a group of heavyweight market players that has helped ICE establish itself as the top central counterparty for U.S. credit default swaps (CDS).
http://jlne.ws/oXnc3r
Firms & Banks
Northern Trust names CFO Morrison president, COO
By: Steve Daniels, Crain's
Northern Trust Corp. is rethinking its executive suite. Chicago’s biggest bank on Tuesday named William Morrison, a veteran of Northern
and most recently chief financial officer, to the newly created role of chief operating officer. Mr. Morrison also is getting the title of president, most recently held by Chairman and CEO Frederick (Rick) Waddell.
http://jlne.ws/pTbNG2
Goldman Sachs workers each to take home £300,000 for a year in which the bank halved its earnings
Daily Mail
Earnings have halved since the start of the year after the Wall Street giant failed to protect itself against the massive turbulence on financial markets.
http://jlne.ws/qmRXs2
Goldman to Cut Jobs as Debt Trading Misses
By Christine Harper, Bloomberg
Goldman Sachs Group Inc. (GS), the U.S. bank that makes most of its money from trading, said it will cut about 1,000 jobs after a plunge in fixed-income revenue that was bigger than analysts estimated.
http://jlne.ws/nBV20g
How to Determine if TIPS Are Cheap or Expensive
By Christine Benz, Morningstar
In a column about how much to invest in Treasury Inflation-Protected Securities, you noted that "TIPS investors might be inclined to take a more tactical approach, adding to them when they appear cheap and lightening up on them when they appear dear." But how would investors go about making those judgments?
http://jlne.ws/qER6HT
BofA Drops Below $10, First Time in 2 Years
By Rick Green, Bloomberg
Bank of America Corp. (BAC), the biggest U.S. lender by assets, fell below $10 a share in New York trading today as concern mounted about the company’s ability to restore profit.
http://jlne.ws/oDJZKI
Goldman to Cut Jobs as Debt Trading Misses
By Christine Harper, Reuters
Goldman Sachs Group Inc. (GS), the U.S. bank that makes most of its money from trading, said it will cut about 1,000 jobs after a plunge in fixed-income revenue that was bigger than analysts estimated.
http://jlne.ws/nBV20g
Bank of NY Mellon gains on European uncertainty
FT.com
http://jlne.ws/nLNkcL
Royal Bank of Scotland is sued by federal regulators over credit union losses
Los Angeles Times
The National Credit Union Administration lawsuit is seeking $629 million for allegedly selling risky mortgage securities to Western Corporate Federal Credit Union. Federal regulators are seeking $629 million in damages from a Royal Bank of Scotland unit accused of selling riskier-than-advertised mortgage securities to Western Corporate Federal Credit Union, a San Dimas credit union that failed ...
http://jlne.ws/oCayGM
Tradition sees strong take up of swaps platform
By Philip Stafford, Financial Times
Compagnie Financière Tradition, one of the five biggest interdealer brokers, is shaping up to rival market leader Icap after the Swiss-based group said its new electronic trading platform had conducted trades worth more than E100bn in its first two months of existence.
http://jlne.ws/ogn946
Deutsche Bank, SocGen Face Pressure to Boost Funds After Tests
BusinessWeek
Deutsche Bank AG, Royal Bank of Scotland Group Plc, Societe Generale SA and UniCredit SpA may face pressure from investors to boost capital after scraping through Europe's banking stress tests.
http://jlne.ws/nmzgIl
RBS restructuring head to quit for Lloyds - report
Reuters Finance News (EU) via Yahoo! UK and Ireland Finance
Royal Bank of Scotland's head of restructuring and risk, Nathan Bostock, is leaving the bank to join rival Lloyds Banking Group , Sky News reported on Monday. Bostock is expected ...
http://jlne.ws/ogWw4K
HSBC alerts customer segment of IRS letter
UPI
A bank at the core of a U.S. crackdown on tax scofflaws has alerted Indian-American clients it received an IRS summons seeking U.S. account-holders' names.
http://jlne.ws/p1hBmO
HSBC, Barclays on cost-cutting spree
Business Standard India
In a departure from roaring growth and profit numbers posted last year, two leading British lenders in the country, HSBC and Barclays, are on a cost-cutting spree, involving some retrenchments as they realign their operations.
http://jlne.ws/r15SJJ
Barclays Takes the Lead in IPOs
BusinessWeek
Ros Stephenson's cultivation of private equity firms pays off.
http://jlne.ws/pTFYxk
U.S. regulators sue RBS over mortgage securities
Reuters via Yahoo! UK & Ireland News
Royal Bank of Scotland is facing a second lawsuit from U.S. credit union regulators accusing it of misrepresenting mortgage backed securities that it sold.
http://jlne.ws/okp7eP
Citigroup Says $22 Billion at Risk in Five European Nations
BusinessWeek
Citigroup Inc., the third-biggest U.S. bank, estimated it has at least $22 billion in loans, trading assets and other "exposures" to Greece, Italy, Portugal,
Spain and Ireland.
http://jlne.ws/r7Yph1
Citigroup goes on the offense: hiring, expansion
San Francisco Chronicle
For 2 1/2 years, Vikram Pandit was forced to hunker down to fix Citigroup's troubled businesses and fend off the bank's critics in Washington. Now, after reporting a 24 percent profit increase for the second quarter,...
http://jlne.ws/pELvDG
Citigroup investigates charge it ignored service members act
Pittsburgh Post-Gazette
Banking giant Citigroup is looking into allegations in a federal lawsuit filed by Sewickley-area lawyers that it ignored a law barring most foreclosures on homes owned by active-duty soldiers.
http://jlne.ws/rthxvQ
U.S. probes Credit Suisse for aiding tax evasion
By Katie Reid and Chris Vellacott, Reuters
Swiss bank Credit Suisse is being probed by the U.S. Department of Justice as part of a broader investigation into banks suspected of helping Americans evade taxes.
http://jlne.ws/qtkGvG
Regulators
IMF urges China to strengthen yuan
CNNMoney
China's economy is growing rapidly, but the International Monetary Fund believes it could be doing so on stronger footing, if the government were to
loosen its tight grip on its currency.
http://jlne.ws/pfV24Z
FSB releases consultation documents on measures to address systemically important financial institutions
The Financial Stability Board (FSB) and the Basel Committee on Banking Supervision are today launching a public consultation on two documents that set out proposed measures to address the systemic and moral hazard risks posed by systemically important financial institutions (SIFIs). The measures implement the framework contained in the FSB’s recommendations endorsed by the G20 Leaders in November 2010.
http://jlne.ws/nthWmB
Rules cleared to identify systemic clearinghouses
By Ronald D. Orol, MarketWatch
A group of financial watchdogs on Monday approved rules for designating derivatives clearinghouses systemically important, a move that will allow regulators to start identifying which of the intermediaries for the $450 trillion swaps industry will be subject to higher capital levels and more examinations.
http://jlne.ws/ruGR9b
Global News
Financial regulators and industry meet
Press Release
The Board of the Finance Industry Council of Australia (FICA) yesterday held talks with the APRA Chairman and Members, and the ASIC Chairman and Commissioners, on regulatory and other issues facing the industry.
http://jlne.ws/ouEtYS
ISDA Hosts Regional Regulators Workshop
HONG KONG--(BUSINESS WIRE)--The International Swaps and Derivatives Association, Inc. (ISDA) hosted an Asia Pacific Regulators Workshop in Hong Kong today with supervisors and policymakers from 19 regulatory bodies across the Asia Pacific region.
http://jlne.ws/pueXcz
Egypt Bond Sale May Hedge Against Post-Election Instability: Arab Credit
By Ahmed A Namatalla, Bloomberg
Egypt’s first bond sale since the popular uprising that ousted its president in February may help cushion the country against higher borrowing costs after the year-end elections should political instability persist.
http://jlne.ws/mYsGY6
Greece debt: Merkel dampens expectations of deal
BBC
German Chancellor Angela Merkel has played down the chances of Thursday's emergency eurozone summit resolving Greece's debt crisis.
http://jlne.ws/q8TIh1
Bank of Canada keeps key interest rate at 1%
CBC News
The Canadian dollar soared nearly a penny in trading Tuesday after the Bank of Canada decided to keep its bench-mark overnight interest rate steady at one per cent.
http://jlne.ws/pnKiKE
Plan D stands for default ... and the death of the euro
By Wolfgang Münchau, Financial Times
The biggest single danger in the eurozone crisis now is that events are moving too fast for Europe’s complacent political leadership. Last week, the crisis reached Italy. And the European Union looked the other way.
http://jlne.ws/rrujab
Spain and Italy top results in stress tests
By Patrick Jenkins and Brooke Masters in London and Quentin Peel in Berlin - Financial Times
Spain and Italy’s leading banks were the strongest performers in last week’s European stress tests, in a surprise result that could help relieve the funding pressure that had been building on them.
http://jlne.ws/olkc61
ECB and Merkel clash over Greece
By Peter Spiegel and Stanley Pignal in Brussels and Quentin Peel in Berlin - Financial Times
The head of the European Central Bank placed a major obstacle on the path to a new agreement on a Greek financial bail-out, saying the bank could not accept defaulted bonds as collateral, potentially cutting off fundng from the Greek banking system.
http://jlne.ws/oAOBAb
Italy to give final OK to austerity package
By Alessandra Rizzo, The Daily News
Italy passed a —70 billion ($99 billion) austerity package on Friday in a move considered crucial to preventing the eurozone's third-largest economy from succumbing to the debt crisis.
http://jlne.ws/qsurAo
Greek rescue goes long
IFR
Eurozone officials are working on a new plan to restructure Greece’s sovereign debt. Earlier French-led proposals to roll over debt have been shelved and discussions now centre on replacing old debt with super-long bonds of up to 40 years. Such issuance would allow banks to avoid writing down their holdings, and would also reduce the country’s immediate repayments. Christopher Spink reports.
http://jlne.ws/oyD9fa
European Banks Urged to Bolster Reserves Following Stress Tests
By JULIA WERDIGIER AND JACK EWING, The New York Times
About two dozen European banks were put under official pressure Friday to bolster their reserves, after a much-anticipated test of whether they would be able to survive such economic shocks as a further deterioration in the sovereign debt crisis.
http://jlne.ws/qMv2va
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Conversation Starter
ISDA Marks First Anniversary Of Dodd-Frank Act: Clearing, Transparency Drive Improvements In OTC Derivatives Markets
Press Release
NEW YORK, Thursday, July 21, 2011 – At the first anniversary of the Dodd-Frank Act, market participants, policymakers and others are assessing the safety of the over-the-counter (OTC) derivatives markets in light of the legislation as well as efforts the industry has undertaken over the past few years in conjunction with global regulators. The International Swaps and Derivatives Association, Inc. (ISDA) believes the markets are safer and more efficient today, as evidenced by the following:
1) More OTC derivatives are being cleared.
2) The industry continues to reduce the level of notional outstanding through its compression efforts.
3) ISDA and the industry have selected vendors to act as trade repositories for all the major asset classes to report trade activity to global regulators.
"ISDA strongly supports efforts to make the OTC derivatives markets safer and more efficient," said Conrad Voldstad, ISDA chief executive officer. "With regard to Dodd-Frank, we believe its implementation should be centered initially on safety and soundness issues. Let's finalize the clearing rules and get the
trade repositories in place."
ISDA believes that regulations that dramatically change the method of executing business should be done carefully and over time. It is the proposed rules regarding electronic execution and extraterritoriality that most concern users and dealers alike. ISDA is not convinced the costs imposed by the rules and the likely resulting reduction in liquidity are justified at this time, especially since imposition of these requirements will likely drive business to other jurisdictions.
**CN: See the full ISDA release here.
Related Stories:
US Deputy Secretary Of The Treasury, Neal Wolin, On The Dodd-Frank Act, One Year Later
On the one-year anniversary of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Deputy Treasury Secretary will be on Capitol Hill this morning testifying before the Senate Banking Committee. He will focus on how Dodd-Frank’s core reforms are strengthening safeguards for consumers and investors, and providing the necessary tools for limitingrisk in the financial markets. "These reforms were an obligation, not a choice. Without them, we could not build the financial system we need—a financial system with the stability and the resilience necessary to support our economy and protect it in times of stress," Wolin says in submitted testimony. "Our country needs a financial system that is stronger and more robust, and also promotes innovation, fosters growth, and creates jobs—a system that channels capital effectively to businesses and to consumers."
http://jlne.ws/pxPj51
NCUA's Matz Cites Stronger, Safer Financial System
ALEXANDRIA, Va. (July 21, 2011) – National Credit Union Administration (NCUA) Board Chairman Debbie Matz commented at the start of today’s Board meeting about the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The comments of Chairman Matz follow:
“As we begin this Board meeting, I want to take a few moments to comment on the Dodd-Frank Act, which became law one year ago today. In reflecting on this milestone, we should remember why we needed to act to restore the public’s trust in our financial system and what has happened since the bill became law. Years of excess, greed, and financial mischief resulted in a severe financial crisis that took our economy into a deep recession. Americans were justifiably scared. We needed to change the rules for our financial markets by better protecting consumers, regulating the unregulated, and controlling Wall Street’s biggest institutions. The result was the Dodd-Frank Act. During the last year, NCUA has focused on completing the many credit union reforms required by this landmark law. It is therefore fitting that we will consider another mandated change at today’s Board meeting—the interim final rule on remittance transfers. In the last year, the Dodd-Frank Act has also begun to achieve its desired results of promoting a stronger, safer, more stable financial system. The actions of NCUA and other regulators, together and independently, are correcting many of the weaknesses laid bare by the financial crisis...
http://1.usa.gov/ieZ9VY
Swaps Rules Will Be Delayed Without More Funding - SEC's Schapiro
By Jessica Holzer and Jamila Trindle Of DOW JONES NEWSWIRES
The implementation of a new regulations for the $600 trillion over-the-counter derivatives market will be further delayed unless the U.S. Securities and Exchange Commission gets a budget boost, SEC Chairman Mary Schapiro said in prepared testimony to a Senate panel.
http://jlne.ws/qePI7z
Dodd-Frank financial reform law hasn't curtailed banks' profits
Los Angeles Times
Banking executives argued vehemently against Dodd-Frank a year ago, saying it would erode earnings. But in the last two weeks, banks have reported billions of dollars in profits. Just a year ago, banking executives argued vehemently against the most sweeping overhaul of financial regulations since the Great Depression, saying the law enacted then would stifle innovation and erode profits.
http://jlne.ws/nCbZvU
Little to celebrate on Dodd-Frank’s birthday
By Hal Scott, Financial Times
America’s Dodd-Frank act is one year old on Thursday. The act made some useful corrections in the regulation of American financial markets, but it has failed to respond effectively to the root causes of the financial crisis and its impact on the global financial system. In the short term, it has hindered economic recovery. Worse, in the longer term, it has actually made future crises more likely, while potentially damaging the international competitiveness of America’s financial institutions.
http://jlne.ws/pJXRWi
CFTC Finalizes 3 More Derivatives Rules
Dow Jones
The Commodity Futures Trading Commission unanimously approved three more new derivatives rules Tuesday, bringing the number of final rules required by the Dodd-Frank law to 10, out of over 50 proposed rules. Last year's Dodd-Frank financial overhaul law charged the CFTC and the Securities and Exchange Commission with writing new rules to create a new regulatory regime for over-the-counter derivatives called swaps. The law's one-year anniversary is Thursday, by which time most of the new rules were supposed to be written, but the commission acted last month to delay some of the law's requirements for as long as six months. The Dodd-Frank law aims to make as many swaps as possible trade on open platforms and go through clearinghouses.
Regulators Weigh Changes To Bank Ownership Caps In Swaps Venues
By Jacob Bunge and Katy Burne, DOW JONES
Regulators are reconsidering proposals that would limit the amount of voting power dealer banks have in derivatives clearinghouses and swaps trading platforms, worried that draft rules went too far, according to people involved in the discussions. A proposal last fall from the Commodity Futures Trading Commission would have allowed up to one-fifth of voting equity to be held by any individual member in a clearinghouse or swap execution facility.
http://jlne.ws/nmXDsf
Lead Stories
Wall St. Makes Fallback Plans for Debt Crisis
By LOUISE STORY and JULIE CRESWELL, NY Times
Lawmakers in Washington are racing to reach a deal to save the country from defaulting on its debt, but financial players are devising doomsday plans in case the clock runs out.
http://jlne.ws/p2yqKy
Audit of Fed finds conflict-of-interest weakness
By Greg Robb and Ronald D. Orol, MarketWatch
A long-awaited audit of the Federal Reserve’s emergency lending programs recommended several areas that need reform, including the central bank’s conflict-of-interest policies.
Debt fears lead to US downgrade
By Michael Mackenzie in New York, Financial Times
Egan-Jones has become the first US rating agency to downgrade the country’s sovereign credit rating from triple A to double A plus as it focuses on the rapid rise in outstanding debt over the past five years.
http://jlne.ws/oDKu3c
Some investors likely to bail if U.S. rating cut
MarketWatch
Wall Street's leading trade association waded into the debt-ceiling debate Tuesday, warning that a U.S. credit-rating downgrade would be a shock to the markets.
http://jlne.ws/oVQwe8
S and P Threatens Broad Downgrade of Finance Companies
CNBC
Standard and Poor's Friday put a broad range of financial firms on negative credit watch, warning they could all be downgraded if the United States
has its credit rating cut.
http://jlne.ws/mRU5ej
Fitch: Rating Linkages to the U.S. Sovereign Rating A Sector and Transaction Analysis
Report - Registration required
http://jlne.ws/mOI8kr
Debt ceiling scuffle already hurting economy
Reuters
When U.S. President Barack Obama warns about the possible damage to economic growth from a failure to lift the debt ceiling, he usually speaks about it in the future tense. So does Federal Reserve Chairman Ben Bernanke who, when asked about the issue in congressional testimony last week, said “it certainly could slow the economy.”
http://jlne.ws/p4cUK5
**CN: "Debt ceiling scuffle" sounds a bit like a dance. It's probably not easy to do without stepping on someone else's toes.
Tim Geithner: Sides are moving closer on debt deal
By JENNIFER EPSTEIN, Politico
Treasury Secretary Timothy Geithner said on Monday there’s progress on the debt talks and he is “absolutely” certain that President Barack Obama and congressional Republicans will be able to reach a deal to raise the ceiling ahead of the August 2 deadline.
http://jlne.ws/nB5Pxk
Draft deal for Greece includes fund overhaul
By Gabriele Steinhauser, Associated Press
A draft of a deal on a new bailout for Greece foresees an overhaul the eurozone's bailout fund in an attempt to stop the debt crisis from engulfing larger countries like Spain or Italy.
http://jlne.ws/oNMSJ1
French-German Proposal for Europe Emerges Before a Meeting on Greece
By STEPHEN CASTLE AND JUDY DEMPSEY, The New York Times
The leaders of Germany and France agreed late Wednesday on a proposal for a rescue plan for Greece to be presented to a summit meeting of European officials on Thursday, a statement from the French president said.
http://jlne.ws/mUG5GQ
ECB said to accept temporary Greek default in rescue
By Gernot Heller and Luke Baker, Reuters
The European Central Bank is willing to let Greece slip into temporary default as part of a crisis response that would involve a bond buyback but no new tax on banks, EU sources said on Thursday.
http://jlne.ws/njxuDR
Fed should do more if US economy doesn't improve-Evans
By Ann Saphir, Reuters
If the U.S. economy does not show signs of sustainable improvement this quarter, the Federal Reserve should dig into its toolbox to find new ways to help it along, a top Fed official said on Thursday.
http://jlne.ws/qKXuA7
8 Banks Fail EU 'Stress Tests'
BY DAVID ENRICH, WSJ.com
European regulators, trying to douse the Continent's financial crisis, unveiled the results of their banking "stress tests," but the small number of lenders that flunked the exams provoked skepticism.
http://jlne.ws/qZiQGm
Politicians Can't Agree on Debt? Well, Neither Can Economists
CNBC
The politicians grappling over how to pay the nation’s debts have been contributing to the heat of summer with back-and-forth charges that their opponents are disregarding the laws of economics.
http://jlne.ws/nnFmOu
Obama Picks Consumer Bureau Leader
The Daily Beast
It looks as though Elizabeth Warren will be headed back to Harvard: President Obama has picked Richard Cordray, the former attorney general of Ohio, to lead the Consumer Financial Protection Bureau.
http://jlne.ws/oidTLE
Obama laying out why he didn't press harder for Simpson-Bowles
By Jeanne Sahadi, CNNMoney
Last December, the bipartisan debt reduction commission that President Obama created put out a series of recommendations supported by a majority of its members.
http://bit.ly/p0pk2W
Investors Break Their Bonds to Ratings Agencies
Reuters
Some of the world's largest asset managers are cutting ties to credit rating agencies, potentially signaling the beginning of the end of their grip on global financial markets.
http://jlne.ws/nnCZnN
S and P: U.S. Debt Cut May Cascade to Other Entities
Reuters
A wide assortment of U.S. entities directly linked or reliant on the federal government's credit rating might suffer a ``knock-on'' effect and be downgraded if the nation loses its AAA rating, Standard & Poor's said in a statement Friday.
http://jlne.ws/o5w5GB
Sovereign Debt Weakens European Banks
New York Times
The latest bank stress test revealed how exposed banks are to the government bonds of Greece, Portugal, Spain and Italy.
http://jlne.ws/ovBR87
Southern Exposure for Europe Banks
BY DAVID ENRICH , WSJ
Europe's banks are sitting on vast quantities of loans to individuals and businesses in cash-strapped Southern European countries, highlighting how plain-vanilla loans, not just government debt, pose potential risks to the Continent's troubled banking system.
http://jlne.ws/p5Zcni
Fed Members Release Financial Reports
By Jeffrey Sparshott and Andrew Ackerman
Federal Reserve Vice Chairman Janet Yellen stands as potentially the wealthiest member of the central bank’s board of governors since joining in
October.
http://jlne.ws/nfY7gT
Events
Credit Risk in Emerging Markets
August 1, 2011
www.theIFM.org
Making Sense of Credit Default Swaps
August 10, 2011
www.theIFM.org
FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
Economic News
July 2011 Business Outlook Survey - Indicators Suggest Activity Is Near Steady - Philadelphia Fed
Federal Reserve Bank of Philadelphia
Responses to the Business Outlook Survey suggest that regional manufacturing activity remained weak in July. The survey's indicators for activity and new orders, which had turned negative last month, recovered somewhat but are at very low positive readings. Firms indicated that employment grew modestly while the average workweek lessened. Indexes for prices show a continuing trend of moderating price pressures. The broadest indicator of future activity improved markedly this month, rebounding from its lowest reading in 31 months in June.
http://jlne.ws/ox3B0X
Leading economic index rises 0.3 percent in June
Reuters
A key gauge of future economic activity rose less than expected in June as headwinds from the debt ceiling debate and recent floods and tornado damage in some regions of the country kept growth moderate, the independent Conference Board said on Thursday.
http://jlne.ws/qXhvZz
Housing starts hit 6-month high
Reuters
Housing starts rose more than expected in June to touch a six-month high and permits for future construction unexpectedly increased, a government report showed on Tuesday, likely reflecting growing demand for rental apartments.
http://jlne.ws/nqQwn8
Consumer Spending: The Chicken or the Egg
By DAVID LEONHARDT, The New York Times
Yet more on the consumer bust, this time from David Backus (via Andrew Gelman): The suggestion … is that the economy is growing slowly because consumers aren’t spending money. But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. As a teacher, I can tell you that it’s almost impossible to get students to understand that the first statement isn’t obviously true. What I’d call the demand-side story (more spending leads to more output) is everywhere, including this piece, from the usually reliable David Leonhardt.
http://jlne.ws/rnCTAd
Homebuilder Confidence in U.S. Rose in July
By Bob Willis, Bloomberg
Confidence among U.S. homebuilders improved in July from a nine-month low as executives turned less pessimistic on the outlook for sales.
http://jlne.ws/rgcVZC
Industrial Production in U.S. Climbs 0.2%
By Bob Willis, Bloomberg
Industrial production in the U.S. rose less than forecast in June, restrained by declines in the output of autos and business equipment.
http://jlne.ws/n7ff5g
CPI: Inflation retreats on lower gas prices
CNN Money
Falling prices at the pump pushed inflation lower in June, but consumers are still paying significantly more than they were last summer.
http://jlne.ws/q2lseD
Exchanges, Clearing Houses & MTFs
For CME Group, uncertainty is a two-edged blade
By Ann Saphir, Reuters
Uncertainty is proving a two-edged sword for CME Group Inc . Worries over a debt crisis have lit a fire under CME's interest-rate futures markets, as investors turn to contracts at the Chicago Board of Trade and the Chicago Mercantile Exchange to protect their portfolios from market gyrations, a top CME official said on Wednesday.
http://jlne.ws/pwVKCX
NYSE Bonds Distributing Markets Via Bonds.com Platform
Press Release
Bonds.com Group, Inc. (OTC.BB:BDCG) today announced that it has entered an agreement with NYSE Euronext (NYX) to make NYSE Bonds orders executable via its BondsPro trading platform, effective on July 13, 2011.
http://jlne.ws/qfqzJG
NYSE Euronext Appoints John Spiegel as Vice President, Interest Rate Business Development for NYSE Liffe U.S.
NYSE Euronext (NYX) today announced that John Spiegel has been appointed as Vice President, Interest Rate Business Development, for NYSE Liffe U.S. In this Chicago-based role, Mr. Spiegel is responsible for expanding the NYSE Liffe U.S. interest rate futures complex by continuing to create and develop strong customer relationships across the spectrum of key market participants, including banks, asset managers, FCMs, and inter-dealer brokers. He will report to Marco Bianchi, Senior Vice President, Head of Business Development, NYSE Liffe U.S.
http://jlne.ws/p7WjJW
DTCC Bolsters Its Global Funds Processing Business With New Hire - Industry Veteran Joins DTCC’s Wealth Management Services Team, Strengthening The Company’s Ability To Bring Certainty And Reliability To The Offshore Mutual Funds Marketplace
Press Release
The Depository Trust and Clearing Corporation (DTCC) announced yesterday the appointment of Gail Weiss as vice president and head of global business development, Wealth Management Services, to further strengthen its global funds processing business.
http://jlne.ws/oSTph7
LCH.Clearnet’s SwapClear Clears OTC Interest Rate Swaps For Friesland Bank Through ABN AMRO Clearing - First Client To Clear OTC IRS
Transactions In The Netherlands
Press Release
Friesland Bank, ABN AMRO Clearing Bank N.V. (ABN AMRO Clearing) and LCH.Clearnet Ltd (LCH.Clearnet), today announced that Friesland Bank has signed up to LCH.Clearnet’s SwapClear service to clear OTC interest rate swap (IRS) transactions through ABN AMRO Clearing. Friesland Bank is the first Dutch client to benefit from SwapClear’s proven risk management experience.
http://jlne.ws/n2syUG
ICE credit clearer bulks up, gets Dodd-Frank ready
By Jonathan Spicer, Reuters
IntercontinentalExchange Inc's U.S. clearinghouse for credit derivatives, known as ICE Trust US, will add nearly a dozen formal users and become a new entity approved by the Dodd-Frank financial overhaul.
http://jlne.ws/rj9QVi
NYSE Bonds Distributing Markets via Bonds.com Platform
Bonds.Com Group, Inc. (OTC.BB: BDCG) today announced that it has entered an agreement with NYSE Euronext (NYX) to make NYSE Bonds orders executable via its BondsPro trading platform, effective on July 13, 2011.
http://jlne.ws/qTbOps
Start-Up Targets Price Transparency in Bonds, Derivatives
BY KATY BURNE, Dow Jones
A technology start-up called Benchmark Solutions introduced a service Monday offering investors a way to assess if dealers are offering them a fair price on fixed-income and derivatives trades. The company, started by the co-founder of electronic bond and swaps trading platform Tradeweb Markets LLC and backed by private-equity giant Warburg Pincus LLC, promises to try to bring the same level of price transparency to credit markets that exists in the stock markets.
http://jlne.ws/peXCsZ
ICE credit clearer bulks up, gets Dodd-Frank ready
By Jonathan Spicer, Reuters
IntercontinentalExchange Inc's (ICE.N) U.S. clearinghouse for credit derivatives, known as ICE Trust US, will add nearly a dozen formal users and become a new entity approved by the Dodd-Frank financial overhaul. The clearinghouse, which will be renamed ICE Clear Credit, added 11 bank units as formal "clearing participants," bulking up a group of heavyweight market players that has helped ICE establish itself as the top central counterparty for U.S. credit default swaps (CDS).
http://jlne.ws/oXnc3r
Firms & Banks
Northern Trust names CFO Morrison president, COO
By: Steve Daniels, Crain's
Northern Trust Corp. is rethinking its executive suite. Chicago’s biggest bank on Tuesday named William Morrison, a veteran of Northern
and most recently chief financial officer, to the newly created role of chief operating officer. Mr. Morrison also is getting the title of president, most recently held by Chairman and CEO Frederick (Rick) Waddell.
http://jlne.ws/pTbNG2
Goldman Sachs workers each to take home £300,000 for a year in which the bank halved its earnings
Daily Mail
Earnings have halved since the start of the year after the Wall Street giant failed to protect itself against the massive turbulence on financial markets.
http://jlne.ws/qmRXs2
Goldman to Cut Jobs as Debt Trading Misses
By Christine Harper, Bloomberg
Goldman Sachs Group Inc. (GS), the U.S. bank that makes most of its money from trading, said it will cut about 1,000 jobs after a plunge in fixed-income revenue that was bigger than analysts estimated.
http://jlne.ws/nBV20g
How to Determine if TIPS Are Cheap or Expensive
By Christine Benz, Morningstar
In a column about how much to invest in Treasury Inflation-Protected Securities, you noted that "TIPS investors might be inclined to take a more tactical approach, adding to them when they appear cheap and lightening up on them when they appear dear." But how would investors go about making those judgments?
http://jlne.ws/qER6HT
BofA Drops Below $10, First Time in 2 Years
By Rick Green, Bloomberg
Bank of America Corp. (BAC), the biggest U.S. lender by assets, fell below $10 a share in New York trading today as concern mounted about the company’s ability to restore profit.
http://jlne.ws/oDJZKI
Goldman to Cut Jobs as Debt Trading Misses
By Christine Harper, Reuters
Goldman Sachs Group Inc. (GS), the U.S. bank that makes most of its money from trading, said it will cut about 1,000 jobs after a plunge in fixed-income revenue that was bigger than analysts estimated.
http://jlne.ws/nBV20g
Bank of NY Mellon gains on European uncertainty
FT.com
http://jlne.ws/nLNkcL
Royal Bank of Scotland is sued by federal regulators over credit union losses
Los Angeles Times
The National Credit Union Administration lawsuit is seeking $629 million for allegedly selling risky mortgage securities to Western Corporate Federal Credit Union. Federal regulators are seeking $629 million in damages from a Royal Bank of Scotland unit accused of selling riskier-than-advertised mortgage securities to Western Corporate Federal Credit Union, a San Dimas credit union that failed ...
http://jlne.ws/oCayGM
Tradition sees strong take up of swaps platform
By Philip Stafford, Financial Times
Compagnie Financière Tradition, one of the five biggest interdealer brokers, is shaping up to rival market leader Icap after the Swiss-based group said its new electronic trading platform had conducted trades worth more than E100bn in its first two months of existence.
http://jlne.ws/ogn946
Deutsche Bank, SocGen Face Pressure to Boost Funds After Tests
BusinessWeek
Deutsche Bank AG, Royal Bank of Scotland Group Plc, Societe Generale SA and UniCredit SpA may face pressure from investors to boost capital after scraping through Europe's banking stress tests.
http://jlne.ws/nmzgIl
RBS restructuring head to quit for Lloyds - report
Reuters Finance News (EU) via Yahoo! UK and Ireland Finance
Royal Bank of Scotland's head of restructuring and risk, Nathan Bostock, is leaving the bank to join rival Lloyds Banking Group , Sky News reported on Monday. Bostock is expected ...
http://jlne.ws/ogWw4K
HSBC alerts customer segment of IRS letter
UPI
A bank at the core of a U.S. crackdown on tax scofflaws has alerted Indian-American clients it received an IRS summons seeking U.S. account-holders' names.
http://jlne.ws/p1hBmO
HSBC, Barclays on cost-cutting spree
Business Standard India
In a departure from roaring growth and profit numbers posted last year, two leading British lenders in the country, HSBC and Barclays, are on a cost-cutting spree, involving some retrenchments as they realign their operations.
http://jlne.ws/r15SJJ
Barclays Takes the Lead in IPOs
BusinessWeek
Ros Stephenson's cultivation of private equity firms pays off.
http://jlne.ws/pTFYxk
U.S. regulators sue RBS over mortgage securities
Reuters via Yahoo! UK & Ireland News
Royal Bank of Scotland is facing a second lawsuit from U.S. credit union regulators accusing it of misrepresenting mortgage backed securities that it sold.
http://jlne.ws/okp7eP
Citigroup Says $22 Billion at Risk in Five European Nations
BusinessWeek
Citigroup Inc., the third-biggest U.S. bank, estimated it has at least $22 billion in loans, trading assets and other "exposures" to Greece, Italy, Portugal,
Spain and Ireland.
http://jlne.ws/r7Yph1
Citigroup goes on the offense: hiring, expansion
San Francisco Chronicle
For 2 1/2 years, Vikram Pandit was forced to hunker down to fix Citigroup's troubled businesses and fend off the bank's critics in Washington. Now, after reporting a 24 percent profit increase for the second quarter,...
http://jlne.ws/pELvDG
Citigroup investigates charge it ignored service members act
Pittsburgh Post-Gazette
Banking giant Citigroup is looking into allegations in a federal lawsuit filed by Sewickley-area lawyers that it ignored a law barring most foreclosures on homes owned by active-duty soldiers.
http://jlne.ws/rthxvQ
U.S. probes Credit Suisse for aiding tax evasion
By Katie Reid and Chris Vellacott, Reuters
Swiss bank Credit Suisse is being probed by the U.S. Department of Justice as part of a broader investigation into banks suspected of helping Americans evade taxes.
http://jlne.ws/qtkGvG
Regulators
IMF urges China to strengthen yuan
CNNMoney
China's economy is growing rapidly, but the International Monetary Fund believes it could be doing so on stronger footing, if the government were to
loosen its tight grip on its currency.
http://jlne.ws/pfV24Z
FSB releases consultation documents on measures to address systemically important financial institutions
The Financial Stability Board (FSB) and the Basel Committee on Banking Supervision are today launching a public consultation on two documents that set out proposed measures to address the systemic and moral hazard risks posed by systemically important financial institutions (SIFIs). The measures implement the framework contained in the FSB’s recommendations endorsed by the G20 Leaders in November 2010.
http://jlne.ws/nthWmB
Rules cleared to identify systemic clearinghouses
By Ronald D. Orol, MarketWatch
A group of financial watchdogs on Monday approved rules for designating derivatives clearinghouses systemically important, a move that will allow regulators to start identifying which of the intermediaries for the $450 trillion swaps industry will be subject to higher capital levels and more examinations.
http://jlne.ws/ruGR9b
Global News
Financial regulators and industry meet
Press Release
The Board of the Finance Industry Council of Australia (FICA) yesterday held talks with the APRA Chairman and Members, and the ASIC Chairman and Commissioners, on regulatory and other issues facing the industry.
http://jlne.ws/ouEtYS
ISDA Hosts Regional Regulators Workshop
HONG KONG--(BUSINESS WIRE)--The International Swaps and Derivatives Association, Inc. (ISDA) hosted an Asia Pacific Regulators Workshop in Hong Kong today with supervisors and policymakers from 19 regulatory bodies across the Asia Pacific region.
http://jlne.ws/pueXcz
Egypt Bond Sale May Hedge Against Post-Election Instability: Arab Credit
By Ahmed A Namatalla, Bloomberg
Egypt’s first bond sale since the popular uprising that ousted its president in February may help cushion the country against higher borrowing costs after the year-end elections should political instability persist.
http://jlne.ws/mYsGY6
Greece debt: Merkel dampens expectations of deal
BBC
German Chancellor Angela Merkel has played down the chances of Thursday's emergency eurozone summit resolving Greece's debt crisis.
http://jlne.ws/q8TIh1
Bank of Canada keeps key interest rate at 1%
CBC News
The Canadian dollar soared nearly a penny in trading Tuesday after the Bank of Canada decided to keep its bench-mark overnight interest rate steady at one per cent.
http://jlne.ws/pnKiKE
Plan D stands for default ... and the death of the euro
By Wolfgang Münchau, Financial Times
The biggest single danger in the eurozone crisis now is that events are moving too fast for Europe’s complacent political leadership. Last week, the crisis reached Italy. And the European Union looked the other way.
http://jlne.ws/rrujab
Spain and Italy top results in stress tests
By Patrick Jenkins and Brooke Masters in London and Quentin Peel in Berlin - Financial Times
Spain and Italy’s leading banks were the strongest performers in last week’s European stress tests, in a surprise result that could help relieve the funding pressure that had been building on them.
http://jlne.ws/olkc61
ECB and Merkel clash over Greece
By Peter Spiegel and Stanley Pignal in Brussels and Quentin Peel in Berlin - Financial Times
The head of the European Central Bank placed a major obstacle on the path to a new agreement on a Greek financial bail-out, saying the bank could not accept defaulted bonds as collateral, potentially cutting off fundng from the Greek banking system.
http://jlne.ws/oAOBAb
Italy to give final OK to austerity package
By Alessandra Rizzo, The Daily News
Italy passed a —70 billion ($99 billion) austerity package on Friday in a move considered crucial to preventing the eurozone's third-largest economy from succumbing to the debt crisis.
http://jlne.ws/qsurAo
Greek rescue goes long
IFR
Eurozone officials are working on a new plan to restructure Greece’s sovereign debt. Earlier French-led proposals to roll over debt have been shelved and discussions now centre on replacing old debt with super-long bonds of up to 40 years. Such issuance would allow banks to avoid writing down their holdings, and would also reduce the country’s immediate repayments. Christopher Spink reports.
http://jlne.ws/oyD9fa
European Banks Urged to Bolster Reserves Following Stress Tests
By JULIA WERDIGIER AND JACK EWING, The New York Times
About two dozen European banks were put under official pressure Friday to bolster their reserves, after a much-anticipated test of whether they would be able to survive such economic shocks as a further deterioration in the sovereign debt crisis.
http://jlne.ws/qMv2va
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