European Bonds Climb, Pushing Yields to Lowest in Two Months, on Subprime

(Bloomberg) -- European government bonds gained,
pushing 10-year yields to a two-month low, as the U.S. subprime
mortgage crisis continued to stoke demand for the safest assets.

Bunds also advanced for a second day as the risk of owning
European corporate debt rose, according to traders of credit
default swaps, prompting investors to switch to safer government
securities. European 10-year yields dropped the most in 3 1/2
years last week as Federal Reserve Chairman Ben S. Bernanke said
the housing market woes may slow the wider U.S. economy.


Read more at Bloomberg Bonds News

Yen Drops to Near Record Low Against Euro as Rising Stocks Spur Risky Bets

(Bloomberg) -- The yen fell to near a record low
against the euro as gains in global stocks encouraged investors
to buy risky assets funded by loans in Japan.

Investors put on so-called carry trades amid waning concern
that financial firms will suffer mounting losses from holdings
of debt backed by U.S. subprime mortgages. The yen briefly pared
its decline after Federal Reserve Chairman Ben S. Bernanke, in
testimony to the Senate Banking Committee, said there will
``clearly'' be losses on subprime-backed debt.


Read more at Bloomberg Currencies News

European Government Bonds Fall on Speculation Growth Will Remain Resilient

(Bloomberg) -- European government bonds fell as
waning concern that defaults on U.S. subprime mortgages will hurt
the wider economy prompted investors to seek higher yields on
riskier assets such as stocks and emerging market debt.

Benchmark 10-year debt dropped, pushing yields up from a
week low, as shares in Asia rallied after a Chinese report that
showed the economy grew at the fastest pace in 12 years and as
European equities rose. Federal Reserve Chairman Ben S. Bernanke
yesterday predicted growth will pick up ``a bit'' next year.


Read more at Bloomberg Bonds News

Euro Gains May Stall at $1.3850 on Barrier Options, Mitsubishi-UFJ Says

(Bloomberg) -- The euro's gains against the dollar
may stall around $1.3850 because of selling to protect options
that would become worthless should the currency rise further,
according to Bank of Tokyo-Mitsubishi UFJ Ltd.

The single European currency yesterday rose to a record high
of $1.3833 after Federal Reserve Chairman Ben S. Bernanke told
U.S. lawmakers the housing market may weigh on economic growth
and inflation may slow.


Read more at Bloomberg Currencies News

China's Yuan Rises to Highest Since End of Link in 2005 as Growth Surges

(Bloomberg) -- The yuan rose to the highest since
the end of a dollar link in July 2005 after a report showed the
economy grew the most in 12 years, adding to speculation China
will seek a stronger currency to curb inflation.

Gains in the yuan may help reduce inflows from export
earnings and keep excess funds from flooding the economy with
cash, spurring lending and investment. Federal Reserve Chairman
Ben S. Bernanke yesterday said China needs a flexible exchange
rate to foster an ``independent monetary policy.''


Read more at Bloomberg Currencies News

Treasuries Are Little Changed on Report Showing Consumer Prices Edged Up

(Bloomberg) -- Treasuries were little changed as
consumer prices in June had the smallest gain in five months.

Benchmark 10-year note yields earlier dropped as Bear
Stearns Cos. told investors in its two failed hedge funds that
they will get little if any money back. Chairman Ben S. Bernanke
will testify today before a congressional committee on the
economy and monetary policy.


Read more at Bloomberg Bonds News

Bernanke, Trichet Turn to BIS as Investors Ignore Warnings on Global Risk

(Bloomberg) -- Six decades ago, the U.S. Treasury
wanted to shut down the Bank for International Settlements,
saying it helped finance the Nazis. Today, Jean-Claude Trichet
and Ben S. Bernanke are transforming the organization into one
of the world's most powerful networking clubs.

With hedge funds and private equity firms pumping record
sums of money around the world economy, central bankers fret
that investors are taking on too much risk. As a result, the
bankers are increasingly turning to the Basel, Switzerland-based
BIS, the oldest international financial institution, for
research and advice, and to coordinate damage-control plans.


Read more at Bloomberg Bonds News

U.S. Stocks Fall After ISM Sends Bond Yields Up; AT&T, Exelon Shares Drop

(Bloomberg) -- U.S. stocks dropped after growth in
the service industry accelerated faster than expected, pushing
the yield on the 10-year Treasury note to a nine-month high.

AT&T Inc. and Exelon Corp. led shares of telephone
companies and utilities to the steepest drops among 10 industry
groups, as rising bond yields make stocks with high dividends
less attractive. Bed Bath & Beyond Inc., the largest U.S. home-
furnishings chain, had the biggest fall in the Standard & Poor's
500 Index after it said earnings will trail its forecast and
Federal Reserve Chairman Ben S. Bernanke warned the housing
slump will continue longer than anticipated.


Read more at Bloomberg Stocks News

Dollar Extends Losses Against Euro, Yen on Bernanke's Comments on Housing

(Bloomberg) -- The dollar extended its drop against
the euro and yen after Federal Reserve Chairman Ben S. Bernanke
said tighter lending standards for mortgages will ``restrain''
housing demand longer than policy makers expected.

``The market is taking the tone of Bernanke as a little bit
dovish,'' said Michael Malpede, a senior currency analyst in
Chicago at Man Global Research. ``He is painting a bearish
picture on the housing sector. This may cool market speculation
that we are going to see a rate hike.''


Read more at Bloomberg Currencies News