With Washington at Impasse, Worry Over Investor Reaction (NYT)
“We may have a few stressful days coming up — stressful for the markets of the world and the American people,” William M. Daley, the chief of staff for Mr. Obama, said on CBS’s “Face the Nation” Sunday morning…Analysts point out that the government has neared the brink on reaching crucial financial agreements in the past without marketwide collapse. Still, the greatest anxiety in the markets is that investors will lose confidence in Treasuries and move toward selling them, which would drive their values down and their rates up…Treasuries have been at the center of panics in the United States before, though far earlier in American history. Richard Sylla, a finance professor at the Stern School of Business of New York University who has written about panics, pointed to 1792, when one Treasury trader ran into problems and sent the market into a spiral in which it lost 25 percent of its value… “Today we talk about what happens if the Chinese sell all the U.S. securities; in 1893, foreign investors were doing just that,” Mr. Sylla said.

Moody’s Warns Greek Default Virtually 100 Percent (AP via NYT)
The agency said the new EU package of measures implies “substantial” losses for private creditors. As a result, it cut its rating on Greece by three notches to Ca — one above what it considers a default rating. Though Moody’s said a Greek debt default is “virtually certain,” it noted that the new measures will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden.

Money market funds cut euro bank exposure (FT)
US money market funds have sharply cut their exposure to banks in the eurozone over the past few weeks and reduced the availability of credit, even in stronger countries such as France. The money market funds, historically crucial providers of short term financing to European banks, have withdrawn from all but extremely short-term lending as concerns about sovereign debt have mounted… The 10 largest US prime money market funds reduced their total exposure to European banks by 8.7 per cent on a dollar basis in June, according to the rating agency.

Bank of Ireland to Avoid State Control (Bloomberg)
Ireland agreed to sell as much as 37 percent of Bank of Ireland Plc to an investor group for 1.12 billion euros ($1.61 billion), a day before a rights offering was set to give the government majority ownership of the lender. Private investors will own at least 68 percent of the country’s largest bank after the transaction closes tomorrow, Finance Minister Michael Noonan said in a statement today. The stake is being sold to fewer than 10 institutional investors from outside the country, according to three people with knowledge of the matter.

Bond traders face uncertain week (FT)
Government bond investors and traders are braced for a testing week, as the US Treasury aims to sell $99bn in new debt with the clock ticking on resolving the impasse over raising the country’s debt ceiling. This week’s debt sales may attract less demand from institutional investors concerned about a possible default by the Treasury in early August, leaving bond traders with more than their usual share of the auctions – a result that could lower bond prices, which move inversely to yields.

SAC boasts YTD returns of 9.2% (NYP)
SAC Capital Advisors LP, the $14 billion firm founded by Steve Cohen, told investors that its main hedge fund rose 9.2 percent this year, beating both the stock market and the hedge fund industry.

The Maid’s Tale (Newsweek)
She was paid to clean up after the rich and powerful. Then she walked into Dominique Strauss-Kahn’s room—and a global scandal. Now she tells her story…“Oh, my God,” said Diallo. “I’m so sorry.” And she turned to leave. “You don’t have to be sorry,” he said. But he was like “a crazy man to me.” Continue reading »