Libor scandal prompts Diamond to resign as Barclays CEO
Barclays CEO Bob Diamond stepped down amid increasing pressure related to an investigation of possible manipulation of the London Interbank Offered Rate. "The external pressure placed on Barclays has reached a level that risks damaging the franchise -- I cannot let that happen," Diamond said. "I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth." Marcus Agius, who resigned as chairman Monday, will take Diamond's spot until a permanent successor is found.
Barclays is "not an isolated case" in Libor issue, FSA says
As U.K. prosecutors weigh a criminal investigation of Barclays in reference to manipulation of the London Interbank Offered Rate, Tracey McDermott, acting head of enforcement at the Financial Services Authority, said the bank is "not an isolated case." "You will hear more of this in due course," McDermott said. Meanwhile, fraud prosecutors said they will decide "within a month" about a criminal investigation.
Hunt for credible Libor replacement heats up
Banks are looking for a possible replacement of the London Interbank Offered Rate, which has traditionally been the most accepted measure of short-term interest-rate change. Nomura Holdings and UBS are looking into a rate tied to the market for repurchase agreements, while the U.S. Treasury Department suggested other options.
Airbus will build $600M aircraft plant in U.S.
European aerospace firm Airbus said it will build passenger jets at a $600 million assembly plant in the U.S. When it reaches full capacity, the plant will employ 1,000 people building the A320 family of aircraft. The move is part of Airbus' plan to challenge rival Boeing in its home market.
Microsoft plans $6.2B write-down for Internet division
Microsoft said it will take a $6.2 billion charge in its fiscal fourth quarter on its underperforming online-services division. The write-down exceeds the $5.2 billion to $5.3 billion earnings most analysts are forecasting for the quarter. This will mark the first time Microsoft reports a quarterly loss in at least a decade.
CUSIP must be involved in LEI setup, chairwoman says
Jane Washington, vice president of trust operations at Wells Fargo and chairwoman of CUSIP Global Services, which puts identification numbers on securities in the U.S. and Canada, said CUSIP must be involved with establishing legal-entity identifiers if they are to be successful. The U.S. Commodity Futures Trading Commission wants LEIs for swaps by September. The Group of 20 aims for worldwide implementation by March.
Market Activity
Most Asian-Pacific markets advance; Australian stocks fall
Most Asian-Pacific share markets advanced Tuesday, but Australia's market fell after the central bank left interest rates unchanged. Hong Kong's Hang Seng Index rose 1.5% when traders returned after a three-day break. Taiwan's Taiex gained 1%. South Korea's Kospi added 0.9%. Japan's Nikkei 225 advanced 0.7%. China's Shanghai Composite edged up 0.1%. Australia's S&P/ASX 200 slid 0.1%. India's Sensex was up 0.5% midmorning.
IPO market in U.S. remains weak after Facebook debut
Thirty-nine days passed after Facebook's initial public offering before another company attempted to go public in the U.S., and the IPO market is still shaky. Thirty-one IPOs were successfully brought to market in the second quarter, 33% less than in Q2 of 2011.
High-yield bond market in U.S. appears set for a slowdown
With companies under less pressure to roll over maturing debt and the global economic outlook becoming more uncertain, the pace of high-yield bond offerings in the U.S. in the second half of the year is likely to fall short of the first half.
Economics
U.S. factory output contracts for first time since 2009
Economists were caught by surprise by data indicating that U.S. manufacturing activity in June declined for the first time in three years. The Institute for Supply Management said its manufacturing index fell to 49.7 in June on a scale in which anything below 50 represents contraction. Most economists expected a reading of 52.
Eurozone joblessness soared to historic high of 11.1% in May
Unemployment in the eurozone climbed to 11.1% in May, the highest level since the euro was launched in 1999, EU statistics office Eurostat said. The number of people out of work increased 88,000, to 17.6 million, 1.8 million more than in May 2011.
Growth of Chinese services industry accelerated in June
Expansion of China's services sector picked up last month, driven by an influx of orders and improvement in the real estate market, the China Federation of Logistics and Purchasing said. The federation's services-sector index reached 56.7, compared with 55.2 in May, on a scale in which anything higher than 50 indicates growth.
Analysis: Safest government bonds might have low yields for years
The phenomenon of countries such as the U.S., Germany and the U.K. being able to borrow at record-low yields turns the traditional view of government finance on its head, but it might be around for some time, according to The Economist. "It is a neat trick: buy real goods and services from other countries and sell them low-yielding pieces of paper in return," the magazine notes. "And it looks like one that may have a fair bit of mileage left.
Auditors warn France of urgent need to cut spending
The French audit office warned about a need for strong austerity measures, including laying off public workers, to meet deficit-cutting goals. The overall budget needs to be reduced 3.3% next year, auditors said.
Online reviews become compliance problem for financial advisers
Financial advisers are worried that online testimonials for their firms, even if unsolicited, could get them in trouble with securities regulators. The Securities and Exchange Commission's guidance on social media deals mostly with what appears on advisers' websites and doesn't address comments on a third-party website.
Geopolitical/Regulatory
ECB becomes key player in dealing with Europe's finances
Mario Draghi, president of the European Central Bank, has become a central figure in the debt crisis, after EU leaders handed him a stronger and broader mandate to address the problem. At a recent summit, European leaders moved significantly toward giving the ECB power much like that exercised by the Federal Reserve.
MiFID II could hinder fixed-income markets, TABB says
A TABB Group study says some measures in the updated Markets in Financial Instruments Directive could hurt fixed-income markets and hinder the ability of European governments to raise capital.
Financial Products
PIMCO and Source debut ETF focused on German government bonds
PIMCO and Source debut ETF focused on German government bonds
PIMCO and Source launched an exchange-traded fund that tracks an index of German government bonds. The PIMCO German Government Bond Index Source ETF seeks to deliver the performance of the Markit iBoxx € Germany index using a physical-replication strategy. The ETF won't engage in securities lending.
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