• Italy paid higher yields in the their auction of 5-year bonds. 3.87 billion euros in bonds sold at a yield of 5.6%, up from 4.93%. From the Wall Street Journal.
• Greek credit-default swaps are suggesting a 98% chance of default within 5 years as Germany’s Merkel tried to calm markets saying she won’t let Greece go into “uncontrolled insolvency”. The country’s 10-year bond yield was out to almost 25%. Rumors swirled around the release of a joint statement from France and Germany aimed at calming markets. From Bloomberg.
• BofA to cut $5B in annual costs by 2013. Moynihan shows he is serious about dramatically stream-lining the bank. The process will be painful, resulting in the loss of about 30,000 jobs. Stabilizing this behemoth would be a very good thing for the optics in U.S. banking. From the Wall Street Journal.
• Sweeping changes are proposed for UK banks as the Independent Commission on Banking called for banks to “ring fence” traditional operations, and dramatically increase capital requirements. Such a new model would impact the ability of UK banks to compete globally. From Deal Book.