Monday June 29 Housing and Economic stories

TOP STORIES:

French Bonds Infected as Greek Crisis Swells Euro-Region Spreads - (www.bloomberg.com) Europe’s bond selloff is spreading to markets traditionally viewed as safer, with only Germany remaining unscathed by Greece’s impasse with creditors. The extra yield, or spread, that investors get for holding French or Belgian 10-year bonds rather than benchmark German debt surged above 50 basis points for the first time this year. Even bonds of the Netherlands and Finland, which have top AAA grades from at least two of the three major ratings companies, are suffering as the fallout from the Greek debacle spreads beyond the euro-zone periphery. “The semi-core is selling off,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “On the other hand, the gains the bunds have made have also been rather disappointing. With the Greek story you could have expected the bund to make more ground.”

[Gilbert] Guy Who Manages $112 Billion Sees No Bond Buyers - (www.bloomberg.com) If you haven't realized by now that a lot of people are worried about bond-market liquidity, then I'm not sure why you're bothering to read me. (You're certainly not paying attention to my smarter and funnier colleague, Matt Levine.) But in the hope that you'll at least start taking an interest in where your pension fund is hanging out these days, maybe you'll listen when a guy who manages $112 billion tells you that if bad things happen in bond land, the fire doors might turn out to be locked. Martin Gilbert runs Aberdeen Asset Management which, as previously mentioned, manages rather a lot of money. Here's what he told Bloomberg Television’s Erik Schatzker and Olivia Sterns on Monday, explaining why he's lined up a $500 million overdraft facility and has a further $1 billion of cash: It will get ugly. You want bank lines in place in case you have to meet a redemption and there is no market.

Let's pause for a second to parse that sentence. Gilbert (no relation) was talking about the risk of either Greece leaving the euro or the U.S. starting to raise borrowing costs. Either or both could spook investors, who in turn might ask Aberdeen for their money back.

HSBC Chairman Flint Echoes Investor Worries Over Bond Liquidity - (www.bloomberg.com) HSBC Holdings Plc Chairman Douglas Flint said the clampdown on banks’ trading arms by regulators is contributing to concern by the world’s biggest investors that liquidity could vanish in a bond-market selloff. “We wanted banks to shrink their trading operations and they did,” Flint said at a conference organized by Swiss Re in Rueschlikon, Switzerland on Tuesday. “Now we’re worrying about how much more liquidity is available to long-term investors for their illiquid assets, and hence their appetite to take on such assets.” Flint echoed the concerns of Aberdeen Asset Management Plc Chief Executive Officer Martin Gilbert, who oversees $112 billion in fixed-income assets, and BlackRock Inc., the world’s largest asset manager, which have both set aside more money to meet requests from clients to pull their funds in the event of liquidity drying up. Global bond markets have lost about $640 billion since the end of April, driven by a surge in volatility linked to the worsening Greek turmoil.

Gap Is Closing A Quarter Of Its Stores And Cutting Jobs – (www.buzzfeed.com) The great reckoning in the retail world is, apparently, far from over. Gap, the biggest U.S. operator of specialty clothing stores, said today that it will close 140 North American locations this year while cutting about 250 jobs, mostly at its headquarters. It plans to close 175 stores in the region during the next few years, along with “a limited number” of stores in Europe, the company said in a statement. Significantly, the company said it will not be closing any outlet locations. After the closures — which represent 26% of all the regular Gap locations in North America — the company will have 500 full-price Gap stores and 300 Gap outlets. Gap anticipates saving $25 million a year from the moves starting in 2016, but will take a hit in the short term. “Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” Gap CEO Art Peck said in a statement. The statement doesn’t impact Banana Republic, Old Navy, or Athleta.

Class of 2015 has highest student debt in history - (www.bloomberg.com) The class of 2015 will leave college with more than a degree. They're also shouldering the most student debt in U.S. history. On average, student borrowers who graduate this year will owe $35,051, according Mark Kantrowitz, a student financial aid policy expert and publisher of Edvisors.com. Rising tuition rates have made it tougher for families to cover the cost of college and forced a growing number of students to take on more loans. And graduates will be paying hefty interest rates on their debt. For the 2014-2015 graduating class, interest rates on federal student loans range from 4 percent to 7 percent and rates on private student loans can be even higher. But there strategies for repaying your loans that can help to ease the burden, and even save you money. Here are three ways to win in the game of student loans: See if any of your debt can be forgiven. "The first thing you should consider is taking a look at some government programs," said John O'Meara, a certified financial planner at InnerHarbor Advisors in New York City.

OTHER STORIES:

Global Stocks Fall on Greek Debt Impasse as Oil Rises With Bunds - (www.bloomberg.com)
Greek PM sticks to hard line as contagion hits euro zone bonds - (www.reuters.com)
Spanish 10-Year Bond Yield Rises Above 2.5% Amid Greece Impasse - (www.bloomberg.com)

Emerging Stocks Set for 11-Week Low as China Sinks; Ruble Gains - (www.bloomberg.com)
Greek Deadlock Has Leader Hoping for Miracle to Avoid Default - (www.bloomberg.com)
Greece, creditors dig in after debt talks founder - (www.reuters.com)
Eurozone officials discuss emergency summit on Greece - (www.ft.com)