Wall Street firms cut 2,000 jobs last month. James Brown, a labor market analyst at the New York state Department of Labor, said it was the largest employee reduction since summer interns were released.
Credit Suisse Group bought $7.01 billion in mortgage bonds from the Federal Reserve Bank of New York. The New York Fed acquired the securities in the rescue of American International Group. "I am pleased with the strength of the bids and the level of market interest in these assets," said New York Fed President William C. Dudley.
After easing to 8.8% at the end of 2010, New York City's jobless rate edged back up to 9% in the last month of 2011. The city's unemployment rate is now above the national rate of 8.5%, the state Labor Department reported. The city's restaurant industry laid off 2,400 workers in December, making it the hardest-hit industry that month.
Laurence Fink, chief executive officer at BlackRock, said he expects the divergence between active and passive fund flows to continue. "The trend is not going to be arrested anytime soon," Fink said. "The low-interest-rate environment is making investors look more at risk budgeting, and as they do, the use of [exchange-traded funds] and passive funds is going to continue to grow."
Moody's Investors Service said that while municipal bankruptcies are rare, they carry specific risks. "Municipal bankruptcy poses a number of risks for general obligation bondholders, including the possibility of a missed payment and a loss of their right to recover their principal in full," said Gregory Lipitz, vice president and senior analyst at Moody's. "For special revenue bondholders, in contrast, bankruptcy provides certain protections against default and extinguishment of the revenue pledge."
Japan's main banking organization followed the lead of the country's Financial Services Agency and central bank in questioning possible consequences of the U.S. Volcker rule. "We'll express our similar concerns as public comments" to U.S. officials, said Katsunori Nagayasu, chairman of the Japanese Bankers Association. Stanford University professor Darrell Duffie recently released a study on the impact the proposed Volcker rule would have on market-making.