• Asian stocks rose, led by automakers and financial companies,
• European Central Bank’s Ewald Nowotny said the bank is likely to keep interest rates steady.
• European stocks fell as the World Bank said the global recession will be deeper than it predicted in March
• Federal Reserve is considering creating a utility to replace the Wall Street banks that handle US repo market transactions.
• German business confidence increases in June, signaling an end in recession.
• Unemployment and consumer debt are reducing home ownership by would-be buyers.
• US airlines get thumbs down from frequent travelers.
• World Bank predicted that the global economy will shrink 2.9% this year.
• Carlsberg A/S is close to selling its brewery in Braunschweig, Germany.

A lot has been said recently over the much-maligned traditional rating agencies: S&P and Moody's. The rampant conflicts of interest over the past decade which everyone on Wall Street was all too aware of, somehow were a shock to politicians such as Barney Frank. In fact these very conflicts have been proposed to be the root of the credit and mortgage crisis (one can see how that is not a futile argument: if an excel workbook crashes your PC if you try to assume declining housing prices someone should have raised a red flag somewhere). Of course, that is a naive conclusion but not entirely without merit. In fact, odds are that the next time the market swoons by 40-60%, Barney Frank will refocus populist anger at exactly these rating agencies which have so far managed to escape relatively unscathed.

In the accompanying presentation, it is easy to see why Bill Gross' PIMCO is highly bullish on credit of any variety. As the table below demonstrates, taken straight out of the biggest bond fund's May 2009 presentation "Investing for the Journey and the Destination: What it means across the Capital Structure" PIMCO doesn't see any overvalued instruments in the credit realm: MBS, IG, EM and HY/Loans all have wonderfully green and positive metrics in the valuation column.

• What low bond recovery rates mean: 45-55% cumulative defaults (Vanguard, hat tip Richard) [HY12 at 81? haha]
• The dumb money is beginning to lose conviction (Technical Take)
• Steve Jakubowski: Objecting to the GM 363 Sale's treatment of product liability claims: stepping into the fray (Bankruptcy Litigation Blog)
• Dianne Feinstein: Obama may lack votes for health-care (Bloomberg)

Lots of queries lately as to why 10 years (and other bonds on the curve) are still at markedly negative repo rates: i.e. the phenomenon of negative interest for lenders. This is an interesting topic which I will touch on again soon, especially with recently implemented 300 bps fees for delivery fails. Across The Curve has discussed this issue recently and I point to his post for a good primer. An even better primer is straight out of the New York Fed "Repurchase Agreements with Negative Interest Rates." Recommended Sunday reading.

For the 4 people who are still keeping track of the complete failure that is our banking industry, today the FDIC closed down three more banks. This is what - 40, 50, 60? banks that have failed year to date. I used to keep track few months ago. Now, not so much.