The shutters come down on Greek banks, European stock markets plunge and credit risk surges. Greece dominates the conversation this morning.
Greece introduces capital controls
The Greek government sent a shockwave through Europe over the weekend when Prime Minister Alexis Tsipras called a referendum. The European Central Bank followed that by capping emergency liquidity assistance, leading the Greek government to announce the inevitable: Greece shut the banks, introduced capital controls and closed the Athens Stock Exchange.
European markets plunge
European stocks plummeted at the open this morning: The Stoxx 600 dropped as much as 3.24 percent at one point and the DAX plunged as much as 4.6 percent. Peripheral bonds also sank with yields on the Spanish 10-year and Italian equivalent spiking by over 40 basis points early in the session before retreating from session highs. Germany's bonds climbed the most since 2011.
The Swiss National Bank steps in
A bout of risk aversion sent the euro lower against almost every major currency overnight, forcing the Swiss National Bank to intervene in the currency market. The SNB described the Swiss franc as "significantly" overvalued only two weeks ago, further upward pressure on the currency left the SNB with little choice but to respond as the economy heads for its first recession since 2009.
Credit risk surges
Looking for parallels between Greece and Lehman Brothers? Here's one: The cost of insuring corporate debt against default surged by the most since the day the U.S. investment bank went under. The Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies jumped 20 percent this morning to the highest level since March 2014.
China enters a bear market
A rate cut over the weekend wasn't enough to stop the rot: The Shanghai Composite dropped 3.3 percent today, taking declines from its June peak to more than 20 percent and putting an end to the nation's longest bull market on record. According to people familiar with the matter, Chinese regulators are considering suspending IPOs to try and stabilize the rout. Global risk aversion is making any effort to ease the selloff even more difficult.
What we've been reading
Here's what caught our eye over the weekend.
Mohamed El-Erian has what's coming next for Greece.
The one Greek chart that shows the damage that has been wrought.
The European Union is going bananas.
London house prices are approaching £200 per brick.
The ten days that changed the United States.
Greece is wonderful in so many ways; it's just that finance isn't its strong suit.
Islamic State is selling looted art online to raise cash.