The S&P 500 Financial Index is trying to break above the 200 psych resistance area. The index has tested the level twice but has been unable to push above. The group is among the leading sectors today but the headwinds are certainly keeping investors cautious. It has been an uneventful news day for the group which these days is a positive. There is plenty of speculation over potential SIFI rules and naturally the Greece situation and the potential contagion involved remain a headline away from impacting the group. But for today it would appear the financials will see a respite from the selling pressure. The inability of the index to break back above 200 though is a concern.

News of Note:

1) SIFI Debate: An agreement on a capital buffer for 'systemically important financial institutions' may be reached at a June 25 meeting in Basel, Switzerland, according to government officials. Regulators narrowed their differences at a meeting last week in Frankfurt, agreeing to boost capital levels in the range of 2.0-2.5% (in addition to the industry wide 7% level). U.S. officials want to coordinate with global regulators so that U.S. firms aren't put at a disadvantage. Discussions in the U.S. have ranged from a 2.0-7.0% buffer. Banks are arguing that it will hurt lending if the buffer on capital is too high.

2) Moody's (MCO) downgraded to Neutral from Buy at Lazard.

3) Allstate (ALL) reports May catastrophe loss estimate of $0.6 bln. Co previously announced $1.4 billion in estimated pre-tax catastrophe losses for the month of April 2011, bringing estimated catastrophe losses for the second quarter months of April and May 2011 to $2.0 billion, pre-tax. This announcement is made as part of Allstate's previously announced plan to release month and quarter-to-date catastrophe losses when a monthly estimate exceeds $150 million.

4) Barclays PLC (BCS): Canaccord Genuity notes BCS mgmt yesterday re-iterated and justified their 13.0% RoE target for the group by 2013E (vs. 7.2% in FY10); the new group rev growth target of 4.3-6.4 bln pounds by FY13E implies growth of 14-21% and looks ambitious compared to consensus growth of 10% (3% CAGR). They estimate the current share price is consistent with a FY13E RoE of just 7.5%. The presentation was based on a gradually improving economy, and probably written prior to the recent softening in macro data and escalation of EU sovereign debt crisis. In reality they would conservatively expect Barclays to achieve a lower RoE of c.9% by FY13E. Rev consensus has downside risk in their view with equity trading volumes down. From here, downside limited in their view given strong valuation support; good capital position; and manageable exposure to GIPSI countries (26 bln pounds of loans in Spain; negligible exposure to Greece).

5) Irish Finance Minister Michael Noonan said yesterday that senior bondholders should share in the losses of Anglo Irish Bank Corp. and Irish Nationwide Building Society, reversing a policy of protecting owners of senior securities. The ECB is against imposing losses on investors. President Jean-Claude Trichet said on Feb. 7 that haircuts aren't part of a plan to reduce Ireland's debt load.