Market Rumours

2010/07/23 17:22DJ UK Osborne: Optimistic About Economy Path But Job Not Yet Done
LONDON -Friday's much stronger-than-expected growth data show it was right to start cutting the U.K.'s GBP155 billion deficit this year, Treasury chief George Osborne said Friday. Osborne noted that most of the second quarter's shock 1.1% quarterly expansion came from the private sector 'and put beyond doubt that it was right to begin acting on the deficit now.' Osborne said while he is 'cautiously optimistic about the path for the economy, the job is not yet done.' 'The priority now is to implement the budget policies which support rebalancing and to help ensure the sustained growth that the OBR forecast this year and next,' he said. The new government has laid out plans to chop GBP6.2 billion from public spending in the current financial year and has laid out a GBP113 billion fiscal consolidation plan for the next five years. The opposition Labour party has said the austerity measures could kill off the recovery and in recent weeks--after the government's June 22 austerity budget--consumer and business confidence have taken a knock. However, Friday's data sent the biggest signal so far that the country's economic recovery had gained significant momentum by the time the Conservative and Liberal Democrats coalition took office in May. The U.K. economy grew at its fastest pace in more than four years in the second quarter, the Office for National Statistics said earlier Friday, expanding 1.1% on the quarter and 1.6% on the year between April and June. Economists surveyed by Dow Jones Newswires had forecast much more modest growth rate of 0.6% on the quarter and 1.1% on the year.

2010/07/23 17:11=DJ DATA SNAP: UK Econ Grows 1.1% In 2Q, Fastest Pace In 4 Years
LONDON -The U.K. economy grew at its fastest pace in more than four years in the second quarter, the Office for National Statistics said Friday, in the strongest sign yet that the U.K. recovery has real momentum behind it. In its preliminary growth data, the ONS said the economy expanded 1.1% on the quarter and 1.6% on the year between April and June. That means the U.K. has now expanded for three straight quarters since a deep and protracted recession. In the first quarter, the economy expanded 0.3% on the quarter and declined 0.2% on the year. The last time quarterly growth matched 1.1% was in the first quarter of 2006. Quarterly growth hasn't been higher since the third quarter of 1999. Economists surveyed by Dow Jones Newswires forecast much more modest growth of 0.6% on the quarter and 1.1% on the year. The data will ease concerns that the recent troubles in the euro zone and the government's ambitious fiscal tightening plans will undercut the recovery in the period ahead. Earlier this month, Bank of England policy makers discussed easing policy further because of growth concerns. The biggest contribution to quarterly growth came from the service industry, which expanded 0.9% on the quarter--the fastest expansion in three years. That includes an assumption by the ONS that service sector will contract 0.4% on the month in June. Total production expanded 1% on the quarter, while the ONS said that construction expanded 6.6%--the biggest quarterly rise since 1963.

2010/07/23 16:59=DJ Moody's:IMF Deal Key For Hungary To Cut Market Financing Cost
BUDAPEST -Hungary has no short-term financing issues but resuming talks and securing an agreement with the International Monetary Fund would cut its financing costs longer term and save it from a credit-rating downgrade, rating agency Moody's said Friday. 'An agreement with the IMF would facilitate market access for Hungary and, obviously, improve the situation beyond short-term liquidity,' Moody's lead analyst for Hungary, Dietmar Hornung told Dow Jones Newswires after the rating agency placed Hungary's sovereign rating under review earlier Friday. The move reflects the breakdown Saturday in talks between the IMF/EU and Hungary on the availability of the remainder of the country's existing EUR20 billion credit line. Talks were suspended after Hungary's new government refused to implement further fiscal austerity measures. Rating agency website: www.moodys.com

2010/07/23 16:42=DJ DATA SNAP: Ifo Business Confidence Biggest Jump Since Unification
FRANKFURT -German business confidence made the biggest leap in July since the country's unification, contrary to expectations of a fall, Munich-based think-tank Ifo said Friday. Ifo's compound index of six-month expectations and an assessment of the current situation rose 4.4 points to 106.2. That compares with forecasts of a decline to 101.5 in a Dow Jones Newswires consensus poll of economists. 'The German economy's capacity utilization now is just somewhat lower than the long-term average,' said Ifo President Hans-Werner Sinn. Website: www.ifo.de

2010/07/23 16:04DJ Long-Term JGBs Down On Stock Upturn; Europe Stress Tests Eyed
TOKYO -Long-term Japanese government bonds fell on Friday as a sharp upturn in Tokyo shares sapped demand for safe-haven assets, but the outlook for the JGB market will be contingent on European bank stress test results due later in the global day. Analysts say the outcome of the tests, which are slated to be released 1600 GMT, may alleviate excessive concerns over the future course of the euro zone's financial system and prompt more players to start selling cash bonds, driving long-term JGB yields upward further. If there are no surprises on the test results, the market's focus could turn to whether domestic stock prices will continue rallying as hopes grow for improvements in corporate profits, said Tetsuya Miura, chief market analyst at Mizuho Securities. 'Some JGB investors believe that the 10-year JGB yield may fall below 1.0%, but they might need to keep an eye on how stock markets will develop down the road,' he added. As of 0600 GMT, the benchmark 10-year JGB yield was up one basis point at 1.065%, while lead September JGB futures closed at 141.69, down 0.18. The Nikkei Stock Average ended up 2.3% at 9,430.96. Still, some traders expect JGB yields to remain on a downward trend as the prospects of Japan's economy are increasingly uncertain. Fears linger that the yen may rise sharply and growth in the nation's exports could stall, which will discourage players from actively letting go of JGBs, they said. Indeed, superlong-dated cash bonds were bought earlier in the day, with the 20-year and 30-year yields falling 0.5 basis points to 1.790% and 1.830% respectively. 'As the U.S. economy also shows signs of slowing down, it's very unlikely that investors will rush to sell JGBs,' one trader at a Tokyo securities house said. 'Demand for longer-term JGBs could remain solid for a while, and the possibility is very low that the yields will surge soon,' he added.

2010/07/23 15:33=DJ DATA SNAP: French June Consumer Spending -1.4% On Mo, -1.9% On Yr
PARIS -French consumer spending dropped substantially in June from May, contrary to expectations, due to lower textile and leather products spending ahead of the sales season, while home equipment spending fell after a strong increase the previous month, according to data released Friday by French national statistics office Insee. French consumer spending index dropped 1.4% in June from May and fell 1.9% from a year earlier. Insee also revised May consumer spending growth down to 0.6% from a previous estimate of 0.7%, Insee said. Consumer spending was forecast to rise 0.5% on the month and increase 0.5% on the year, according to a survey of economists by Dow Jones Newswires. In June, spending on textile and leather products dropped 5% from May and was down 8.9% from a year earlier, while home equipment spending dropped 3.6% on the month, after a 6.4% monthly increase in May. On the year, however, home equipment spending was up 6.5%, Insee said. Car spending was stable on the month in June but down 8.2% on the year as a result of the gradual phasing-out of government incentives. Agency Web site: www.insee.fr

2010/07/23 14:57DJ Forex Options: Dlr/Yen Volatilities Down, But Dollar Risks Seen
TOKYO -Benchmark dollar/yen volatilities fell Friday due to a relatively stable exchange rate, but other areas of the options market suggested some investors think the greenback may fall further against its Japanese counterpart in the months ahead, although perhaps not in the coming sessions. In a sign that concern has increased slightly over possible dollar falls in the longer term, one-month 25 delta risk-reversals favoring dollar puts over yen puts edged up to 1.55%/2.05%, from 1.45%/1.95% Thursday in Tokyo. Put options profit on slides in the underlying asset, thus the higher premium for dollar puts suggests the view that the greenback could face further downside pressure against its Japanese counterpart. One market participant entered an eight-week dollar-yen bearish 25-delta risk reversal, at 2.1 volatility points in favor of dollar puts/yen calls over dollar calls/yen puts, a senior dealer at a non-Japanese brokerage in Tokyo said. Echoing the bearish dollar view, a spot foreign exchange dealer at a major Japanese bank said a drop past the U.S. unit's recent low at Y86.27 to as low as Y85.00 is possible in the coming weeks. Such falls in the dollar-yen could be triggered by further signs of weakness in the U.S. economic recovery, dealers said. Still, most investors seemed to think any sharp drops before the weekend are unlikely. One reason is that European bank stress test results, due at 1600 GMT, aren't expected to drastically undermine investor confidence in financial markets. Should the results indeed not prompt flight-to-safety flows, the dollar could rise against the safe-haven yen. Also cutting into benchmark options prices was a slightly higher trading band for the dollar. The greenback traded in a Y86.73-Y87.23 range as of 0300 GMT, up from Y86.34-Y87.22 Thursday. For these reasons, benchmark one-month dollar-yen at-the-money volatilities fell to 10.90%/11.60% from 11.25%/11.95% Thursday in New York.

2010/07/23 14:10=DJ WORLD FOREX: Euro Down Vs Yen As Exporters Sell; Stress Tests Eyed -3-
TOKYO -The euro and dollar fell against the yen in Asia Friday as Japanese exporters and Asian short-term players sold the currencies after they rose to attractive levels earlier in the day.Further declines in the euro and dollar may be short-lived before the 1600 GMT release of the much-awaited results of European stress tests, which gauge whether Europe's banking sector has sufficient capital. The outcome may determine directions of the euro as well as the dollar next week, traders said.The two currencies entered Asian trading Friday amid expectations that Tokyo shares may gain following New York stocks' overnight rise, encouraging market participants to sell the safe-haven yen.Japan's benchmark Nikkei Stock Average was up 2.3% in Tokyo's afternoon session, while share prices in South Korea, Australia and New Zealand were also higher.But the euro and dollar later retreated as Japanese exporters sold the currencies following their climb to favorable levels, prompting Asian short-term players to follow suit, traders said.As of 0450 GMT, the European unit was at Y112.02 from its intraday high of Y112.67 and its New York Thursday level of Y112.05. The greenback meanwhile exchanged hands at Y86.85 compared with its early high of Y87.23 and Y86.93 late Thursday.Some dealers said the two currencies may extend their declines if the stress tests are considered not stringent enough, or if the results come in surprisingly negative, weighing on stocks and prodding players to reduce risks.Mizuho Corporate Bank senior trader Yuichiro Harada said the euro's long-term outlook appears dim, no matter what happens following the results.'Even if the stress tests are evaluated favorably (by the market), this doesn't mean the issues over the euro's credibility will be resolved,' Harada said. Financial conditions in some euro-zone nations may remain stagnant, he added.As of 0450 GMT, the single unit was at $1.2896 compared with $1.2892 overnight. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.565, down from 82.611.

2010/07/23 10:34=DJ MONEY TALKS: Ben Bernanke's Unenviable Balancing Act
NEW YORK -In the late 1990s, U.S. economists talked optimistically about a "Goldilocks Economy" of low inflation and healthy growth. Like Baby Bear's porridge, it was not too hot and not too cold, which seemed to justify the Federal Reserve's relatively easy monetary policy. A decade later, the Fed is grappling with the opposite dilemma. The sluggish U.S. economy with its weak job market, reluctant consumers, nervous businesses and wide output gap is like Mama Bear's porridge: too cold. Yet the Fed has already pumped so much liquidity into the banking system that many fear a rapid move into Papa Bear's "too hot" zone. That's why Fed Chairman Ben Bernanke tried to have it both ways in his comments to lawmakers these past two days. In his prepared testimony, Bernanke talked of the Fed's plans to eventually reduce its balance sheet and get ahead of inflationary pressures. But during question time, he entertained the possibility of the Fed doing more to boost liquidity if the economic recovery falters. The Fed's job is complicated by the safe haven flows that have distorted U.S. bond markets due to fears over Europe's sovereign debt crisis. According to Deutsche Bank's economics team, the "Greece Premium" explains between 60 and 100 basis points of the 10-year Treasury note's historically low yield right now. Rather than its current level around 2.93%, it would be somewhere between 3.53% and 3.93% if investors weren't fearful of a major euro-zone default. Deutsche Bank thinks the fear trade in Treasurys could disappear soon, especially if Friday's stress test results for euro-zone banks bolster confidence. Others aren't so sure. RBS Capital Markets estimates that banks outside of Greece, Spain and Portugal have EUR2 billion in loan exposure to those three debt-laden economies, a giant systemic risk that it says warrants a 10-year yield at 2.75% for quite some time. Yet even RBS thinks the euro zone will eventually pull through. When the market realizes that the sky isn't falling, Treasury yields will back up quickly. That would immediately raise costs for U.S. borrowers, undermining a key source of economic stimulus. What's more, investors are also likely to realize at the same time that, despite everything, the global economy is recovering. Stronger-than-expected purchasing manager data out of the euro zone affirmed that picture Thursday, as did healthy second-quarter earnings from marquee U.S. companies such as Caterpillar Inc. (CAT) and 3M Co. (MMM). Renewed focus on the global recovery would, despite high unemployment, immediately draw attention to the Fed's "too hot" problem: how to drain the $1.1 trillion in excess reserves it has placed in the banking system before they escape into the economy and become inflationary. That's when the Fed's battle to manage inflation expectations will begin--well before actual inflation emerges--with its key goal being to anchor long-term yields. It can't let investors conclude it has lost control over the excess reserves, otherwise 10-year yields will rise even further. Hence Bernanke's frequent reminders that he has various tools for draining those reserves when the need arises. Yet he must also be wary of putting on the brakes too quickly, for fear it could choke off the recovery. All this would be easier if everyone completely trusted the Fed's capacity to manage prices. But unfortunately Bernanke doesn't command such unwavering faith, in part because the 2008 crisis taught markets that they'd placed too much of that in his predecessor Alan Greenspan's flawed confidence in a "Goldilocks" utopia.

2010/07/23 09:32=DJ FOREX VIEW:Euro Rebound Offers Opportunities For Money Managers
NEW YORK -The euro, which has moderated its slide from late 2009 and currently is trading around $1.30, is attracting both bulls and bears.Since December, the euro has swung in a very broad range, roughly between $1.50 and $1.19, making it difficult for long-term investors to get a good handle on the future direction of the currency. Some expect it to gain modestly beyond $1.30, while others see it to ticking back down to around $1.20. Short-term traders, who might pop in and out of the common currency on a daily or weekly basis, recently have placed big bets against the euro, though those have been pared back as the euro has rebounded from its recent lows.The euro dropped to $1.1876 in early June, a more-than-four-year low, as worry over the weak fiscal positions of peripheral euro-zone countries, such as Spain, Greece and Portugal, sent shock waves through financial markets, leading investors to flee the common currency for the safety of the U.S. dollar.Even with the euro now solidly above those levels at $1.29, 'it's too early to make big forays unless you have a very, very long time horizon,' said Constantine Ponticos, managing director of investment management research in London for Pareto, which manages $47 billion in currencies. 'I don't think the market is prepared to afford the euro zone that level of credibility yet,' he said.If investors insist on a euro-specific strategy, Ponticos said, they could place positive bets on the common currency against other European currencies, such as the U.K. pound, Hungarian forint and the Swedish krona. That way, even if the euro does decline--if the euro zone goes into a double-dip recession, for instance--the peripheral currencies are likely to decline as well, he said.Late Thursday, the euro traded at $1.2890 from $1.2763 late Wednesday, according to EBS via CQG.As concerns have eased about the euro zone's ability to extricate itself from its debt crisis, investors have cast worried eyes on the slowing pace of the U.S. recovery, lending the euro some support against the dollar, money managers said.The euro could rebound to around $1.35 over the next one to three months, said Thanos Papasavvas, head of currency management in London for Investec Asset Management, which has $70 billion under management.Papasavvas said even though questions remained on how the euro zone would come through its debt crisis, the fact that the bloc's leaders have at least recognized they have a problem--and have started down the path to solve it--places the euro zone ahead of the U.S., where leaders have yet to tackle high levels of government debt. Papasavvas said he was underweight on the U.S. dollar.Geoffrey Pazzanese, co-manager of Federated's $736 million Intercontinental Fund (RIMAX), has bulked up on holdings in German companies, including Siemens and Daimler, as the country's exporters benefit from a weakened euro.As the euro has come off the $1.50 levels it hit late last year, 'that should be a very good tailwind' for euro-zone exporters, he said.'To a certain extent, euro weakness is quite welcome,' Pazzanese said. If the euro were to make a sustained bounce to the $1.30 to $1.40 area, Pazzanese said he would reassess his current investment strategy, with the common currency then not offering the same benefits to exporters. He said he expects the euro in the longer term to trade between $1.20 and $1.25, as U.S. economic fundamentals outpace those in the euro zone.'There was a time when you couldn't even mention the word 'Europe,'' said Leila Heckman, senior director of Mesirow Financial, a Chicago firm with $37 billion in assets under management. 'The fundamental issues are still there,' she said, but 'as the markets became oversold, that became somewhat of an opportunity.'The euro's slide from the $1.50 area made the common currency a bargain. Heckman's computer model determined Spain is an ideal opportunity for investors among industrialized and emerging economies. The model, which is updated monthly, takes into account the euro's so-called fair value against its biggest trading partners as well as macroeconomic data, growth indicators and measures of momentum.

2010/07/23 09:00=DJ SEC To Give Six-Month Reprieve For Ratings Firms
WASHINGTON -The U.S. Securities and Exchange Commission will give bond issuers six months to omit credit ratings from registration statements in the asset-backed market to give them time to transition to new liability standards under the financial overhaul law, the SEC announced Thursday.The announcement comes a day after the Dodd-Frank financial measure was signed into law.'This action will provide issuers, rating agencies and other market participants with a transition period in order to implement changes to comply with the new statutory requirement while still conducting registered ABS offerings,' said Meredith Cross, director of the SEC's division of corporation finance.Credit-rating agencies are complaining about a provision that eliminates a liability exemption for credit ratings quoted in sales documents of new asset-backed bonds. At least one bond deal, from Ford Motor Co.'s (F) financing arm, was scuttled due to this new provision.With the announcement from the SEC, bond deals can go forward under normal SEC procedures without quoting credit ratings in their registrations. Previously, such deals weren't given expedited approval if they excluded a rating.The SEC says the change in the law only affects deals in the asset-backed market. Rules for the more active corporate debt market won't change under the financial rewrite.'We believe that the corporate debt market has not been, and should not under current rules be, meaningfully affected by the statutory change,' Cross said.Federal Reserve Chairman Ben Bernanke weighed into the controversy earlier Thursday, saying regulators should address the new legal liability for credit-rating agencies.'It is an issue that needs to be looked at,' Bernanke said at a House Financial Services Committee hearing. 'As I understand it, it does inhibit somewhat the sale of the [asset-backed securities].'A spokesman for the financial law's co-author, House Financial Services Chairman Barney Frank, (D., Mass.), said the concerns were overblown.'The law was signed yesterday. To say this was shutting down the ABS market is ridiculous on its face,' said Steve Adamske. 'The law is perfectly clear in its intent, and that is to lower the dependence by investors and everyone else in the world on ratings agencies.'Republicans say jitters in the asset-backed market show the uncertainty created by the financial law.'How profound will the impact of rating agency liability be? And what other sleeper implications are in that bill that we will begin to see affecting markets,' said Rep. Adam Putnam (R., Fla.), in an interview. Putnam questioned Bernanke about the problem at the hearing.Advocates for new liability standard for ratings firms appear unmoved. 'I'm not sure there's any substantive reason why they [ratings firms] should not be subject to the same standard' as accountants, auditors, or investment bankers,' said Jeff Mahoney, general counsel for the Council of Institutional Investors.

2010/07/23 06:11DJ BP To Sell Stake In Pan American Energy; Seeks $9B-Source >BP
BUENOS AIRES -U.K. oil giant BP PLC (BP, BP.LN) has decided to sell its stake in Argentine unit Pan American Energy and is in talks with Argentina's Bridas Corp., a person familiar with the negotiations said Thursday.Reports have put the value of BP's 60% stake at around $9 billion and that is what BP is seeking, the person said.However, Bridas Corp. is offering $6.5 billion, the person said. Bridas already owns the other 40% of Pan American and has priority over any shares in the Argentine unit that BP should opt to sell.BP has been selling assets to raise cash to cover costs related to its massive oil spill in the Gulf of Mexico."BP doesn't know how much cash it will need for what's left of 2010 and 2011," the person said.The person, who asked to remain anonymous given the ongoing nature of the talks, said BP plans to undergo a profound reorganization and that the sale of Pan American could occur within the next two or three months.BP Press Officer David Nicholas said from London that the company wouldn't comment on any plans that it may or may not have to divest in Argentina."That's speculation," Nicholas said. "We don't comment on rumors. If and when we have announcements to make, we make them. We've informed governments in Pakistan and Vietnam that we're looking to divest in downstream assets there," he said.China National Offshore Oil Corporation Ltd., or Cnooc (CEO, 0883.HK) agreed in March to buy a 50% stake in Bridas from Argentina's Bulgheroni family.As BP's existing partner in Pan American, Bridas has considerable say over who gets to buy BP's shares in the event of a sale. If Bridas's offer under the first-refusal option isn't acceptable, BP would then draw up a short-list of potential buyers and submit it to Bridas, which could veto up to 50% of the companies on the list, according to the person.Moreover, if BP wanted to accept an offer from one of the remaining companies on the list, it would still have to give Bridas an opportunity to match the offer.Earlier this week, BP announced that it was selling some U.S.- and Canadian-based oil and gas assets to Apache Corp. (APA) for $7 billion. The deal also included selling an exploration concession in Egypt. BP also has suspended dividends and cut capital spending."BP decided to withdraw from Pan American independently from these sales," the person familiar with the negotiations said.Bridas couldn't be immediately reached for comment.

2010/07/23 06:10DJ CREDIT MARKETS: Borrowers Continue To Sell More New Debt
NEW YORK -Corporate bond issuers were active in the primary market Thursday as strong U.S. corporate earnings, better-than-expected housing data and optimism about the release of forthcoming European bank stress-tests buoyed investor confidence in risk assets.Three investment-grade issuers issued new debt, while the high-yield space continued its robust week with two major debt issues. The fifth Canadian bank this year issued covered bonds. Meanwhile, issuers of asset-backed securities are hamstrung by credit ratings agencies who aren't allowing their ratings to be used with new issues out of fear that new rules in the Dodd-Frank bill could expose them to liability.Credit markets were helped by news that U.S. existing home sales beat analysts' predictions and strong earnings from key industrial firms AT&T Inc. (T), 3M (MMM) and Caterpillar Inc. (CAT).In Europe, overnight reports showed that the euro zone's private sector expanded at a faster pace in July, while murmurs about stress tests results indicate that most European banks have little to fear.The iTraxx Europe Financials credit-default swaps index, which tracks subordinated debt from 25 banks, was 1.61 basis points improved at 211.75 basis points as of 4:25 p.m. EDT, according to Markit.'Barring a shock result on the bank stress tests tomorrow afternoon--which we don't expect--credit should see the gentle rally we've had so far in cash and synthetics extend through the summer,' said Juan Esteban Valencia, credit strategist at Societe Generale, in a commentary. Investment-GradeA mix of high-grade issuers came through and finished dollar bond deals worth over $1 billion.U.S. Bancorp (USB) sold $1 billion in five-year, 2.45% debt securities Thursday at 99.902 to yield 2.471%, or a spread of 0.78 percentage points over comparable U.S. Treasurys, compared to initial price guidance of 0.80 points. U.S. Bancorp announced Wednesday its second-quarter earnings rose 63%, or 45 cents a share, to $766 million from a year earlier, becoming the fourth financial firm this week to sell debt on the heels of an earnings release.Goldman Sachs (GS) and Morgan Stanley (MS) each sold $3 billion in debt Wednesday, while Charles Schwab (SCHW) sold $600 million in debt on Monday.The Canadian province of Quebec sold $1.5 billion in 10-year global notes at 60 basis points over mid-swaps, according to a syndicate banker familiar with the deal. The 3.5% notes priced at a discount to yield 3.547%, in line with guidance.The State Bank of India (SBKJY, 500112.BY) sold a $1 billion in five-year bonds to yield 4.566%, or 2.90 percentage points over comparable U.S. Treasurys.U.S. dollar-denominated high-grade corporate debt issuance stood at $12.6 billion, meaning that Thursday's deals pushed the weekly volume total well over 2010 weekly average issuance total of $13.28 billion.In the secondary bond market, Wednesday's debt issues by Goldman Sachs and Morgan Stanley were most actively traded, and strong demand for the $6 billion in new financial supply drove up prices and lowered yields for the freshly sold bonds, according to data from MarketAxess.The price for Morgan Stanley's 5.5% notes due July 2020 rose by around 1/16 point to yield 5.545%; the price for Goldman Sachs' 3.7% notes due August 2015 rose by 7/16 point to yield 3.629%.Trading volume in both the high-grade and high-yield space was $13.1 billion as of 4:50 p.m. EDT, better than July's $11.66 billion average. High YieldsThe high-yield market continued its solid run this week with a pair of deals pricing and other recent new issues sharing in the gains of the broader secondary market.Much of the cash bond market was up Thursday, with advances led by the technology sector in particular, as notes of NXP BV and Freescale Semiconductor picked up more than a point, while other large credits like First Data Corp. posted similar gains in active trade.In the primary market, Accuride (ACUZ) sold $310 million of 9.5% senior secured notes due 2018 at 97.3 cents on the dollar via lead underwriter Deutsche Bank to yield 10%. Entravision Communication (EVC) sold $400 million of 8.75% senior secured notes due 2017 at 98.7 cents on the dollar via Citigroup to yield 9%. Both of those deals traded higher in early secondary market trade, continuing a trend seen in deals earlier this week, such as Wynn Las Vegas and Interactive Data. 'It's the end of July, so not a lot of deals are typically brought out, but this week has seen a fair amount of issuance for late July,' said Sabur Moini, fund manager at Payden & Rygel. 'The handful of deals we've seen have all gone well.' Weekly Lipper data on high yield fund flows is not expected until later Thursday but fund managers say cash inflows appear solid, if not as spectacular as they were a week ago, when mutual funds focused on speculative-grade debt recorded an uncommonly high $1.27 billion of net inflows.***********'It feels like there's still a lot of cash coming into the market as investors continue looking for yield,' Moini said. 'As Treasurys continue to appreciate and their yields to decline, high yield looks even more attractive.'The high yield CDX derivatives index was up 0.8 point to 97, according to Markit.At 12.2%, the U.S. distressed debt ratio is virtually unchanged in July from its June level of 12.3%, according to Standard & Poor's. The ratio measures the percentage of speculative-grade securities trading at distressed levels, typically meaning risk premiums of more than 1,000 basis points over Treasuries. Asset-backed SecuritiesIssuance of asset-backed securities stands at $61.96B so far this year, compared to $73.82 billion at this time last year, according to Citigroup data. The market faces serious challenges from the financial regulation signed into law Wednesday, as a new provision calls for rating agencies to be labeled 'experts' when filing registration documents with the Securities and Exchange Commission.Not wanting to risk the extra liability, rating agencies have said they won't consent to let their ratings be used for new filings. Commercial PaperThe commercial-paper market has risen for two consecutive weeks on both a seasonally-adjusted and unadjusted basis, according to Federal Reserve data released Thursday. Such increases in this short-term market could signal improvement in the wider economy as companies tap into short-term paper to meet their day-to-day needs and for business expansion.The market added $2.4 billion on a seasonally-adjusted and $8.2 billion on an unadjusted basis. Overall, the market is now $1.1 trillion in size on a seasonally adjusted basis, half of what it was before the crisis when the market totaled $2.2 trillion in July 2007. Mortgage SecuritiesToronto Dominion Bank was in the market with a $2 billion, five-year, covered bond issue of undetermined size Thursday. With this issue, the top-five Canadian banks have sold mortgage bonds to U.S. investors this year. Total foreign covered bond issuance to U.S. investors is $11.04 billion, surpassing the peak of $10.71 billion in 2007.Covered bonds are similar to residential mortgage-backed securities but require issuers to hold the collateral on their own books rather than spin them off into special purpose vehicles. As these bonds carry the additional heft of the full bank's balance sheet, they are seen as a safer alternative to residential mortgage bonds, which were at the heart of the financial crisis.Foreign banks are the only source of these sought-after new bonds, which haven't been minted in the U.S. because of a lack of clear regulations. Last week, Bank of Nova Scotia sold a $2.5 billion, three-year covered bond at a yield of 1.498%.The Toronto Dominion Bank issue, rated triple A by Moody's and DBRS, is backed by residential loans that carry the full faith and credit of the Canadian government.Barclays, Deutsche Bank, RBS and Toronto Dominion are the book runners on the deal.Meanwhile, risk premiums on agency mortgages tightened again as investors flocked to the lower coupons in the hopes of avoiding any hit from higher prepayments as mortgage rates continue to remain at historically low levels. Risk premiums tightened 3 basis points to 129 basis points over comparable Treasury yields. TreasurysPrices of Treasury securities fell Thursday as better-than-forecast global data and strong U.S. corporate earnings spurred a strong rally in the stock market, reducing demand for safe assets.The two-year note's yield rose from the record low of 0.545% hit overnight while the benchmark 10-year note's yield bounced up off a 15-month low. Long-dated securities bore the bulk of the selling, reversing Wednesday's gains.As of 3:50 p.m. EDT, the 10-year note was down 13/32 to yield 2.930% and the 30-year bond was 1 2/32 lower to yield 3.951%. The two-year note was little changed at 0.564%. Bond yields move inversely to prices.