The Chicago Board Options Exchange (CBOE)  this week announced it would begin disseminating values for its first interest rate-based volatility index on June 18. Meantime, CME Group said it would return more than $130 million in MF Global assets to a trustee for failed brokerage firm MF Global, helping to speed the distribution of customer money.

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CBOE To Introduce First Interest Rate-Based Volatility Index
CHICAGO, June 13, 2012 — /PRNewswire/ — The Chicago Board Options Exchange (CBOE) announced today that it will begin disseminating values for its first interest rate-based volatility index on Monday, June 18.  The SRVX Index is designed to offer fixed income options traders and portfolio managers a standardized and transparent measure of interest rate swap volatility.
http://jlne.ws/NAWHKT

CBOE White Paper About Design And Properties Of CBOE Interest Rate Swap Volatility Index
This white paper from the CBOE explains the design and properties of the CBOE Interest Rate Swap Volatility Index Methodology and introduces the SRVXSM Index. The Index Methodology measures the fair market value of future volatility implied by the swaption market for any swaption maturity and tenor of the underlying swap.The Index differs from at-the-money (ATM) implied volatilities as it incorporates additional information contained in the entire skew of out-of-the-money (OTM) swaption prices, serving as the swap rate counterpart to the CBOE Volatility Index
(VIX) for equity volatility.SRVX is the first Interest Rate Swap Volatility Index launched by CBOE and is based on 1Y-10Y US Dollar swaptions.
http://jlne.ws/M7CloP

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NYSE Liffe U.S. Takes on Fed Funds & LIBOR
MarketsWiki.tv
With interest rates hovering around zero, with no lift in sight, the overnight rates market has been looking for new instruments that better reflect the market. NYSE Liffe U.S. is trying to fill that demand with its new General Collateral Finance or GCF Repo Index futures contract. The new contract, which will compete with the Fed Funds futures and LIBOR, is designed by DTCC for NYSE Liffe U.S. and is set to launch on July 16th. JLN editor-in-chief Jim Kharouf reports on NYSE Liffe U.S.’s recent introduction of the new contract in Chicago.
http://jlne.ws/M388oM

Lead Stories

CME to Return $130 Million in MF Global Assets
NY Times
The CME Group agreed on Thursday to return more than $130 million in MF Global assets to a trustee for the failed brokerage firm, helping to speed the distribution of customer money.
http://jlne.ws/NmBqFS

CME Group and Trustee Agreement Regarding Claims Under Exchange Rules
http://jlne.ws/MDoe97

Bernanke: ‘A Trillion There, A Trillion Here’ From The Fed Won’t Fix The Deficit
Forbes
Fed Chairman Ben Bernanke faced off with policymakers on Capitol Hill. Speaking before the Joint Economic Comittee, Bernanke asked policymakers to man up and take responsibility for fixing the budget and putting the deficit on a sustainable track.
http://jlne.ws/LH4FAy

Bernanke’s Testimony: Was it Just a Setup?
Nasdaq
By Barbara Cohen Chief Information Officer ShadowTraders On Thursday Fed Chief Ben Bernanke delivered his testimony to Congress. Everyone sat on pins and needles waiting for what he would say.
http://jlne.ws/L7UUeN

Bernanke gives little hint that Fed plans action to spur hiring
MarketWatch
The U.S. government ran a budget deficit of $125 billion in May, the Treasury Department said Tuesday, pushing the deficit to $844 billion for the first eight months of fiscal 2012. In its monthly budget statement, the Treasury said the government spent $305 billion in May, 31% above the year-ago period. Receipts rose 3%, to $181 billion, the second-highest amount on record for May.
http://jlne.ws/MtKHJ8

Fed’s Bernanke Will Address Teachers August 7
Nasdaq
http://jlne.ws/KwNp2Q

Moody’s downgrades Cyprus on Greek euro exit fears
CBS8.com/AP
Moody’s credit ratings agency on Wednesday drove Cyprus deeper into junk status with a two-notch downgrade to Ba3 over an increased likelihood that debt-crushed Greece will leave the eurozone.
http://jlne.ws/OJ0xzP

Geithner calls for more detail from Europe leaders
Channel 8
Treasury Secretary Timothy Geithner on Wednesday urged European leaders to provide more details as soon as possible on their plans to resolve the continent’s debt crisis.
http://jlne.ws/MS1QNt

Credit Suisse Urged by Central Bank to Boost Capital
Bloomberg
Credit Suisse Group AG (CSGN) needs a marked increase in capital this year to prepare the bank for risks stemming from a possible escalation of Europe’s sovereign-debt crisis, the Swiss central bank said today.
http://jlne.ws/OKdEk6

Libor Traders Said to Avoid Charges in British Probe
Bloomberg
Traders being investigated by U.K. regulators for the suspected rigging of global interest rates are unlikely to face criminal charges while their firms may suffer record fines, people with knowledge of the probe said.
http://jlne.ws/LCuOPW

The Public Whipping of Jamie Dimon
Time Magazine
Last month’s revelation that Dimon’s bank lost somewhere in the ballpark of $2 billion to $5 billion.
http://jlne.ws/MD73oi

Dimon says losses indefensible, still reform skeptic
Reuters via Yahoo! News
WASHINGTON (Reuters) – JPMorgan Chase & Co Chief Executive Jamie Dimon used his much anticipated appearance before lawmakers to apologize for the bank’s multibillion-dollar trading loss but he also made clear he will still criticize how Washington tries to curb Wall Street.
http://jlne.ws/OJSBhA

Mortgage Rates Move Slightly
PR Newswire via Yahoo! Finance
NEW YORK, June 14, 2012 /PRNewswire/ — Mortgage rates posted only slight changes, but it was enough to push the average 30-year fixed mortgage rate to the third new record in a row of 3.91 percent.
http://jlne.ws/KJzsZa

Americans See Biggest Home Equity Jump in 60 Years: Mortgages
Bloomberg
Home equity in the first quarter rose to the highest level since 2008 as homeowners taking advantage of record-low borrowing costs to refinance their loans brought cash to the table to pay down principal.
http://jlne.ws/LnBPDD

U.S. Families’ Wealth Plunged 40 Percent During Recession, Fed Says
WNYC New York Public Radio
In a study ( pdf ) released today, the Federal Reserve reports that Americans saw a record drop in their wealth between the years 2007 to 2010. Driven primarily by plummeting home values, families’ median net worth dropped 38.8 percent, to levels last seen 18 years ago.
http://jlne.ws/LGt4q3

Headed Toward Recession, Fed Has Few Options
TheStreet.com
NEW YORK (TheStreet) — The U.S. economy is drifting toward recession, but when Federal Reserve policymakers meet next week, they will have few options. Jobs creation slipped alarmingly in April and May. Wages, which were rising modestly through the recovery, have been virtually flat for three months.
http://jlne.ws/Kqlgcx

Federal Reserve Directors’ Banks and Businesses Took $4 Trillion in Bailouts: Report
CommonDreams.org
A report released today by US Senator Bernie Sanders (I-Vt.) has revealed the names of 18 former and current directors from Federal Reserve Banks who directly benefited from financial bailouts after the 2008 crisis. The Reserve directors worked in banks and corporations that collectively received over $4 trillion in bailout money allocated by the Federal Reserve.
http://jlne.ws/M7PwUo

World Bank Ready to Help East Weather Debt Crisis, Harrold Says
Bloomberg
The World Bank is ready to give east European countries backing that would allow them to withstand shocks coming from Europe’s debt crisis and ease their reliance on bailout funds, a bank official said.
http://jlne.ws/MDjYGI

Swiss National Bank Pledges Defense Of 1.20-Franc Floor Vs Euro
FOX Business
The Swiss National Bank Thursday repeated its pledge to enforce the minimum exchange rate of 1.20 Swiss francs per euro with the utmost determination.
http://jlne.ws/OKgiGF

France backs stronger ECB role in bank surveillance
Reuters via Yahoo! News
PARIS (Reuters) – France wants the European Central Bank to have a stronger role in overseeing banks in the single currency bloc as part of a package of urgent reforms to increase financial stability in Europe, sources said on Wednesday.
http://jlne.ws/MK2KYX

Eurozone agrees to lend Spain up to 100 bln euros
Reuters via Yahoo! Finance
By Jan Strupczewski and Julien Toyer BRUSSELS/MADRID (Reuters) – Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros to shore up its teetering banks.
http://jlne.ws/LXdAeI

U.S. posts $125 billion deficit in May: Treasury
Market Watch
WASHINGTON (MarketWatch) — The U.S. government ran a budget deficit of $125 billion in May, the Treasury Department said Tuesday, pushing the deficit to $844 billion for the first eight months of fiscal 2012. In its monthly budget statement, the Treasury said the government spent $305 billion in May, 31% above the year-ago period.
http://jlne.ws/OKna6X

Events

2012 Central Bank Forum: Chicago
June 13-15, 2012
http://jlne.ws/JVCTj

Macro Risk Management for Banks
June 14-15, 2012
http://jlne.ws/M8DFFV

Bond China Congress
September 4-5, 2012, Shanghai, China
http://jlne.ws/KXsmS0

Economic News

Wholesale Prices in U.S. Dropped 1% in May on Cheaper Energy
Bloomberg
Wholesale prices in the U.S. dropped in May by the most since July 2009 as costs of energy and food decreased, easing pressure on companies to pass expenses to customers.
http://jlne.ws/NlL23Z

CPI Falls A WHOPPING 0.3% In May
Business Insider via Yahoo! Finance
Analysts predicted it would fall by 0.2 percent month-over-month.
http://jlne.ws/LogKaL

U.S. Consumer Prices Probably Fell for First Time in Two Years
Bloomberg
The cost of living in the U.S. probably fell in May for the first time in two years as fuel prices retreated, buttressing Federal Reserve projections that cheaper commodities will help reduce inflation, economists said before a report today.
http://jlne.ws/NlIumc

Firms & Banks

Former Swiss central bank chief joins Blackrock
Associated Press via Yahoo! News
Former Swiss National Bank chief Philipp Hildebrand is joining U.S. asset management company BlackRock Inc.
http://jlne.ws/KYpUzJ

Trading firm Getco cuts 40 workers
Crain’s Chicago Business
Getco, one of Chicago’s largest trading firms, last week cut about 40 employees, including at least one top manager, as the firm realigns its focus and operations under a new CEO.
http://jlne.ws/LCuO2l

CIT Bank Closes $1 Billion Funding Facility
Business Wire via Yahoo! Finance
CIT Bank, a wholly owned subsidiary of CIT Group Inc. cit.com, a leading provider of financing to small businesses and middle market companies, today announced that it has closed a $1 billion committed U.S.
http://jlne.ws/NBq2Fc

JP Morgan As The New Fannie Mae
Forbes
JP Morgan’s losses will be plugged up by the government somehow.
http://jlne.ws/L7Vvxe

U.S. Treasury to sell stock in Taylor Capitol, 6 other banks
Chicago Tribune
The U.S. Treasury Department on Tuesday said it will auction off several preferred stock investments in seven banks that received government assistance at the height of the financial crisis.
http://jlne.ws/M1Oi1f

Treasury Reaches $619 Million Settlement with ING Bank
FOX Business
The Treasury Department said Tuesday it reached a $619 million settlement with ING Bank for alleged violations of U.S. sanctions.
http://jlne.ws/LHH6Xg

Regulators

Fed’s Tarullo says shadow banking creates risks
Reuters via Yahoo! News
SAN FRANCISCO (Reuters) – A top Federal Reserve official on Tuesday renewed a call for checks on the so-called shadow banking system, which operates outside normal, regulated banking channels, to prevent a repeat of the panic that provoked the 2007-09 financial crisis. Fed Governor Daniel Tarullo did not comment on the outlook for the economy or monetary policy in the speech.
http://jlne.ws/M1nWfF

Nervous markets need policy clarity: Fed’s Evans
Reuters via Yahoo! News
CHICAGO (Reuters) – If the Federal Reserve were to clarify what economic conditions would cause it to finally tighten monetary policy, that would help inform financial markets that remain uneasy about timing, a top Fed official said on Monday. “Markets are still a bit nervous that the Fed will take back some of the accommodation in place,” said Chicago Federal Reserve President Charles Evans.
http://jlne.ws/NlHQoU

FDIC closes bank in Oklahoma
seattlepi.com
FDIC closes bank in Oklahoma The FDIC estimates that failure of First Capital will cost the insurance fund $5.6 million. The pace of bank closures has slowed sharply after ballooning following the financial crisis in 2008. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.
http://jlne.ws/L81HVN

Global News

France backs stronger ECB role in bank surveillance
Yahoo! Finance
France wants the European Central Bank to have a stronger role in overseeing banks in the single currency bloc as part of a package of urgent reforms to increase financial stability in Europe, sources said on Wednesday.
http://jlne.ws/KK308N

China could see rate cuts, not stimulus
The Chinese government is more likely to implement further reforms or cuts in interest rates and reserve ratios, rather than launching an expensive new stimulus plan, current and former officials told a conference on Thursday.
http://jlne.ws/KqgBYi

New Zealand Central Bank Leaves Cash Rate Unchanged at 2.5%
Nasdaq
http://jlne.ws/NAAwog