Market Rumours

2010/07/28 12:31=DJ TAKING STOCK: Outlook Too Uncertain To Justify Buying Now
A rule of thumb for Wall Street traders is this: Before buying, have an idea of where you want to sell, either as a target for profits or as a stop-loss. That way, you can do a quick analysis of whether the potential reward is worth the risk. The worst-case scenario of a double-dip recession may be off the table, but the outlook for the economy, and therefore the stock market, is still far from rosy. So considering how far stocks have already rallied, the potential reward from buying at current levels doesn't seem to be worth the risk. Bulls have been emboldened recently because improved earnings outlooks from high-profile companies in key cyclical sectors suggest the likelihood of a double-dip recession has been overstated. It's no wonder the market's three-month downtrend, which was based on fears of a double dip, appears to have ended. Several key market indexes, such as the S&P 500 index, have climbed above downward sloping trend lines that began at the April highs. And on Tuesday, the yield on the 10-year Treasury note also rose above a similar downtrend line, confirming the view that double-dip concerns have faded. One could also argue the market would also be justified in breaking the pattern of lower highs that's been in place since the correction started. That means the S&P 500 could rise past the June 21 high of 1131. The S&P 500 was at 1113 in midday trading on Tuesday. That, on top of an 8% gain already this month, would seem to be enough of a reward for bulls. To start buying at current levels would mean, however, that they are no longer satisfied with being safe from a double dip. They have to be pretty sure that the S&P 500 will reach a new high for the year, which implies economic growth will be much stronger than currently expected. Another rule of thumb for traders is the intended reward should be at least double the potential risk. Since the most logical place for a stop loss for those buying at current levels is the most recent low, which for the S&P 500 is the July 20 low of 1057, the expected reward needs to be at least 1225, above the April 26 high of 1219, to make buying worthwhile. However, Federal Reserve Chairman Ben Bernanke said just a week ago that the economic outlook is 'unusually uncertain,' with the housing market still 'weak' and with the pace of recent job gains 'insufficient' to materially lower the unemployment rate. In addition, despite some high-profile companies raising earnings outlook of late, as of Monday the expected aggregate year-over-year earnings growth rates for the S&P 500 for each of the next four quarters have actually declined since July 1, according to Thomson Reuters Proprietary Research. That might explain why, as Hinsdale Associates' Director of Investments Andrew Fitzpatrick said, conviction in stocks still appears very low, with trading volume on up days much less than on down days. Basically, as strong as the market has looked recently, the potential reward still isn't enough to attract real long-term buyers.

2010/07/28 11:21=DJ HEARD ON THE STREET: Rebuilding Confidence In Europe
Europe's governments appear to have regained the confidence of investors. Can they now get consumers to follow suit, and offset some of the effects of upcoming austerity?Recent data are encouraging. Tuesday brought a rosy picture from Germany, where economic expectations surged to the highest level since October 2007 according to the GfK consumer survey. While U.S. consumer confidence data again disappointed, last week's euro-area flash consumer confidence number for July showed a near-record monthly gain, J.P. Morgan points out, and at -14.1 is at its highest level since the recovery started.Germany is in a unique position to benefit from the crisis because of its stable financial position and export strength. It is also not tightening fiscal policy this year and unemployment is falling relatively quickly. Other euro-zone countries may need consumers to take more of a leap of faith.Take Spain, where unemployment is already close to 20% and efforts to reduce the deficit sharply will weigh further on consumers. Spanish consumer confidence plummeted in May but advanced slightly in June. Further improvement in sentiment could start to reduce the household savings rate, which has rocketed to 18.5%. A reduction of 2.5 percentage points in the savings rate, leaving it still far above pre-crisis levels of around 11%, could give a 1.5-percentage-point boost to GDP, something the Spanish government is banking on in its assumptions, says one official. With Spain the biggest beneficiary of the European bank stress tests and with fears over its sovereign funding receding quickly, the picture could improve. Encouragingly, in Ireland, where austerity is also biting hard, consumer sentiment has improved steadily.Of course, there are big headwinds. In some countries, such as Greece, additional tax hikes take effect in the second half and will be a further burden. Consumers, although reassured that a government debt crisis has been averted, may yet grow weary of budget cuts and fear tax rises. But European Central Bank President Jean-Claude Trichet looks right in pushing for a degree of austerity. If handled right it could become the source of vital confidence.

2010/07/28 10:40DJ Soros To Buy 4% Of India's BSE For $40 Mln From Dubai Hldg -FT
Billionaire investor George Soros is in final negotiations to buy Dubai Holding's 4% stake in the Bombay Stock Exchange, the Financial Times reported late Tuesday on its website, citing people close to the matter.Soros Fund Management LLC plans to pay about $40 million for the stake, valuing the oldest exchange in Asia at about $1 billion, a person involved in the talks told the U.K. newspaper.The deal is the latest in a series of strategic investments in India's stock and derivatives exchanges, which are diversifying into new asset classes and embracing new technologies to attract 'high frequency' traders.National rules allow individual foreign entities to own up to 5% in a local bourse.Dubai Holding, the conglomerate owned by the emirate's ruler, Sheikh Mohammed bin Rashid al-Maktoum, was said to have been looking to exit the Bombay exchange for some time.Full story at http://www.ft.com/cms/s/0/ff294da0-99b4-11df-a852-00144feab49a.html

2010/07/28 10:22=DJ Moody's Sees Bailouts Less Likely For Large Regional Banks
Government support for big regional banks is waning, Moody's Investors Service warned late Tuesday.Industry giants such as Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) can probably still rely on bailouts in the short term. But even government support for these lenders will likely decline over the next one to two years, the ratings agency said.Moody's put ratings on 10 of the largest regional banks, including US Bancorp (USB), Capital One Financial (COF) and PNC Financial Services Group (PNC), on review for possible downgrade because the U.S. government may be less likely to bail them out in the future.'Moody's had incorporated extraordinary support into the banks' ratings in 2009 when the U.S. banking system was in turmoil and the government clearly stated that there would be extraordinary support for the larger regional banks,' Moody's said.'Now that the U.S. banking system has moved beyond the depths of the financial crisis, the probability of government support for these banks could be lower,' it added.Recent financial reforms, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, also signal 'the potential that government support for these banks will be reduced,' the ratings agency added.After the government stepped in to save several of the largest U.S. financial institutions during the crisis of 2008 and early 2009, Moody's developed a two-tier rating system for the industry. One set of ratings was based on the assumption of taxpayer bailouts, so-called supported ratings. Meanwhile, the agency also issued ratings that assumed no taxpayer support.Moody's affirmed the long-term and short-term ratings of Bank of America, Citigroup Inc. (C) and Wells Fargo on Tuesday. But the agency also changing its outlook to negative from stable on their 'supported' ratings.'The outlook change is prompted by the recent passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) -- a law that, over time, is expected to result in lower levels of government support for U.S. banks,' the ratings agency said.'Over the near term, as a practical matter, Moody's thinks that regulators will continue to face significant obstacles when trying to resolve complex, interconnected, global firms without risking a systemically threatening contraction in credit,' Moody's added.'However, over the next 12 to 24 months, as the new law is implemented, rules and regulations are written, and if economic conditions stabilize, we expect that our support assumptions for systemically important banks will likely revert to pre-crisis, or even lower, levels,' it said.The other large regional banks that face potential ratings downgrades by Moody's are: BB&T Corp. (BBT), Fifth Third Bancorp (FITB), KeyCorp (KEY), Popular Inc. (BPOP), Regions Financial (RF), SunTrust Banks (STI) and Zions Bancorp (ZION).

2010/07/28 08:48DJ IMF's Lipsky: Global Recovery On Track Despite Slowing Momentum
WASHINGTON -The global recovery is expected to continue despite recent signs of slowing momentum, a senior International Monetary Fund official said Tuesday. 'The most likely prospect is for a moderate, multi-speed recovery, with significant downside risks,' said IMF Deputy Managing Directory John Lipsky at an event here. 'While financial markets have improved somewhat in recent weeks, ongoing financial market strains have heightened uncertainty,' he said, adding that the biggest policy challenge facing the world's largest governments is to sustain the recovery while restoring market confidence.

2010/07/28 08:36DJ UK GDP Growth To Miss Official Forecasts In 2011, 2012 - NIESR
LONDON -U.K. economic growth will be slightly stronger this year than official estimates, but weaker in the following two years because of a sharp reduction in government spending and a smaller boost to growth from consumer spending, a think-tank said Wednesday.The National Institute of Economic and Social Research predicted that gross domestic product will grow 1.3% in 2010, 1.7% in 2011 and 2.2% in 2012. That compares with the official forecasts for growth of 1.2% in 2010, 2.3% in 2011 and 2.8% in 2012, as provided by the Office for Budget Responsibility."Economic growth this year has so far been supported by government current and capital spending and a slowing pace of destocking," NIESR said, adding that the second half of this year will likely see a "sharp moderation in the rate of growth". The institute still expects a clear recovery in the full year GDP figure, following the deepest recession since World War II.Second quarter U.K. GDP grew at a much more robust pace than expected, rising 1.1% from the first quarter of 2010 and by 1.6% compared with the second quarter of 2009, official preliminary data showed last week.NIESR doesn't expect this heady pace of growth to persist, though. It said: "The U.K. economy is expected to recover more gradually than in previous recessions due to retrenchment in the government and household sectors."Some of the drag on growth from these two areas will likely be a direct result of the government's emergency budget, which detailed tough austerity measures including slashing departmental budgets by up to 25% and raising the U.K.'s sales tax by 2.5 percentage points to 20%.The increase in value added tax--to be introduced next year--could help keep interest rates lower for longer if it leads to a slower pace of demand, but consumers will bear the brunt of the increase.NIESR added that the higher VAT rate will likely mean inflation remains well above the 2% target rate at 3% this year and 2.7% in 2011, before slipping below target in 2012 when it should average around 1.4%.Chancellor of the Exchequer George Osborne's austerity budget is widely expected among economists--including those at NIESR--to have a strong impact on the U.K.'s record budget deficit, but possibly at the expense of the economy, which looks set to take longer than previously thought to return to its trend rate of growth."The coalition government's more aggressive fiscal consolidation program will result in public sector net debt falling more sharply than on our previous forecast," NIESR said."Tax and spending plans in the emergency budget will reduce the economic growth rate by 0.4 percentage points in 2011."NIESR also said that if recent anecdotal evidence of a stronger services-sector performance is confirmed, then the Bank of England could raise interest rates before the end of the year, rather than in the middle of 2011 as the think-tank currently forecasts."But as we have noted, downside risks to growth remain," it said. Part of that downside risk could come from the U.K.'s trade with other countries. This is expected to act as a net drag on GDP growth this year, although further out it should make a stronger contribution to economic expansion, NIESR said.

2010/07/28 06:38DJ CREDIT MARKETS: Issuers Bring $5B Supply, Volatility Lingers
NEW YORK -Riskier corporate bonds were back in favor Tuesday as $1.8 billion in high-yield supply was expected to price. Added to that was nearly $3 billion in new investment-grade paper. The deals were well received as sovereign credit fears that plagued markets in recent months seemed to have diminished, at least for now, though there remains some potential for a retreat.'I don't think the volatility and jitteriness is going to go away any time soon,' said Tom Murphy, portfolio manager at Columbia Management in Minneapolis. 'The stress test results--I don't think they were a panacea for the market.'Closely watched credit derivatives indexes started giving up their early gains as midday approached, after U.S. economic data were marginally weaker than expected.The Conference Board, a private research company, said the Consumer Confidence Index fell to 50.4 this month, lower than the 50.8 expected and the 54.3 reported for June.While the weakening was only modest, it sent spreads wider on key credit default swap indexes in Europe and the U.S. The Markit CDX North American Investment Grade Index lost 4 basis points from its opening level to trade at 102.96 basis points as of 11:30 a.m. EDT and by 4 p.m. was nearly flat at just 0.27 tighter than Monday's close.Gavan Nolan, credit analyst at Markit, said some of the widening was attributable to market participants taking profits and buying CDS protection instead of selling CDS as they did when spreads were wider before the stress test results were released Friday.The S&P/Case-Shiller home price index rose 4.6% in May compared to a year ago and was better than the 4.1% gain expected.Investment-Grade BondsIn primary issuance, AT&T Inc. brought $2.25 billion in new five-year paper and Safeway Inc. brought $500 million in new 10-year bonds.AT&T's 2.5% issue priced at 99.694 to yield 2.565%, or a spread of 0.77 percentage point over Treasurys, in line with guidance of 0.75-0.80 percentage point. J.P. Morgan, Royal Bank of Scotland and UBS were joint bookrunners on the deal, proceeds from which will be used for general corporate purposes.In secondary trading, AT&T 4.85% bonds due February 2014 were priced at 110.014 to yield 1.912% through maturity, or a spread of 0.12 percentage point, according to MarketAxess figures.Meanwhile, Safeway's 3.95% bonds priced at 99.556 of par to yield 4.004%, equivalent to a spread of 0.95 percentage point over Treasurys. That was on the tight end of guidance set at 1 percentage point, plus or minus 0.05 of a point. Orders on the sale were around $3 billion, according to one syndicate banker. The bookrunners are J.P. Morgan, Morgan Stanley and Royal Bank of Scotland.Safeway said proceeds will be used to repay outstanding commercial paper debt and also a portion of its $500 million in 4.95% notes that mature on August 16 this year.The new paper matures on August 15, 2020 and is rated Ba2 by Moody's Investors Service, and BBB by Standard & Poor's and Fitch Ratings. There was a change of control provision at 101% of par.In secondary trading, Safeway's 5% notes due August 2019 traded with a spread over Treasurys of 0.85 percentage point and had a yield of 3.899%.Bonds issued by BP continued to rally after the company announced $17.15 billion in second-quarter loss and said it would sell off about $30 billion in assets.BP's 5.25% notes due November 2013 were most in demand. Prices for those securities plummeted in early June, falling to as low as 90 cents on the dollar in late June, but the notes improved steadily since the start of July. Prices surged for short-dated BP bonds Monday after news that BP's Chief Executive Tony Hayward will step down. The cost to insure $10 million in BP debt for five years fell to $320,000 annually from $340,000 on Monday, according to Markit.Junk BondsTexas Industries, a building-materials maker, came to market with $600 million in 10-year notes in order to buy back older, pricier debt. Price talk for the notes was in the area of 9.25%, with pricing via lead underwriter J.P. Morgan expected later Tuesday.Aircastle Ltd. was slated to sell a $300 million offering of 8-year notes and Air Canada was also expected to sell a multi-tranche offering.These are the latest in a string of speculative-grade companies to bring junk bond issues in recent days, illustrating how remarkably low rates have touched off a boom in the high-yield market.Issuance of speculative-grade corporate debt, which sputtered along at $6 billion in June and $4.7 billion in May, has already reached $9.4 billion in July, according to Fitch Ratings.'The main driver behind the build-up in the high yield pipeline is that you had a number of issuers wait out the months of May and June looking for yields to tighten and volatility to settle down,' said Darin Schmalz, a director in high-yield research at Fitch.The average deal size has increased from $290 million in the beginning of July to $680 million last week, according to Fitch, meaning that companies are now able to sell larger blocks of debt. Four of the six high-yield deals that sold last week were increased in dollar amount from initial estimates.Late Monday, a deal from Vantage Drilling Co. was increased from $940 million to $1 billion, and an offering from Air Canada was increased by $200 million Tuesday.'Investors are being driven to the high yield asset class with decent yields in the 7%-8% range, [which] are difficult to come by in other asset classes,' Schmalz said. 'Issuers have definitely noticed they can get a deal done at a lower yields today.'The secondary market was mostly flat, with the Markit CDX North America High Yield index down 0.1 point at 97.75.Agency/MortgagesThe Canadian Imperial Bank of Commerce (CM.T, CM) was in the market with the first reopening of a covered-bond deal.The bank was selling an unspecified amount of additional notes on the $2 billion, three-year covered bond it sold to investors earlier this year.The deal, backed by Canadian government-guaranteed mortgages, was well received by investors, market participants said. It was the first covered-bond deal of the year, and it led to more than $11 billion in similar dollar-denominated covered bonds targeted at U.S. investors.CIBC also sold another $1.25 billion, five-year bond last month.TreasurysThe $38 billion auction of two-year Treasury notes was offered at the lowest yield ever Tuesday, signaling robust demand for safe assets due to uncertainty about the economic outlook and speculation that the Federal Reserve's policy of low interest rates will hold well into 2011.The auctioned yield was 0.665%, smashing the previous record low of 0.738% at June's two-year notes sale, and a boon to the U.S. government as it continues to borrow at historically low interest rates to fund a bloated budget shortfall.Yet prices of Treasury securities were lower as the market braced for additional government debt supply. The Treasury will sell $37 billion in five-year notes Wednesday and $29 billion in seven-year notes Thursday.'You will definitely see new buyers emerge if the market generates enough price concessions, meaning higher yields leading into the five-year and seven-year supply,' said Mary Ann Hurley, vice president of trading in Seattle at D.A. Davidson & Co. 'The two-year note sale is very strong thanks to the back-up in yields and it is the easiest to sell given its short maturity.'As of 3:55 p.m. EDT, the benchmark 10-year note was down 15/32 to yield 3.052%, the 30-year bond was down 1 4/32 to yield 4.084%, and the two-year note was down 3/32 to yield 0.641%. Bond prices move inversely to yields.

2010/07/28 06:23=DJ WORLD FOREX:Euro Falls From 11-Week High; US Growth Concern Weighs
NEW YORK -The euro surrendered an 11-week high against the dollar Tuesday after disappointing U.S. consumer confidence data led investors concerned over the pace of the global recovery to abandon most higher-yielding currencies.But the common currency still hovered near the $1.30 level after brushing up against 1.3050, a slight gain on the dollar, as the euro benefited from investors turning their attention from the euro-zone sovereign debt crisis to worry the U.S. economy might be losing steam.The weaker-than-expected U.S. consumer sentiment data fed into worries that a weak labor sector is restraining a key driver of the economy: consumer spending.Currencies closely tied to the pace of global growth, such as the Australian and Canadian dollars, had earlier in the day joined in the euro's rally after better-than-expected euro-zone economic data and corporate earnings led to gains in global stock markets. The Australian dollar ticked to its highest level since May before the disappointing U.S. data sent stocks wobbling and threw cold water on the rally in most risky assets."People were just chasing risk because of" gains in stocks, said Amelia Bourdeau, senior G10 currency strategist at UBS in Stamford, Conn. "Without strong conviction, you can see a turnaround on a dime."The U.K. pound bucked the trend of losses in higher-yielding currencies, hanging onto its strong gain on the dollar and trading near its highest level since February after U.K. retail sales smashed through economists' expectations with their best reading in three years.Late Tuesday, the euro emerged slightly higher at $1.3006 from $1.2997 late Monday, though it was off its 11-week high of $1.3047, according to EBS via CQG. The dollar was at Y87.97 from Y86.89, while the euro was at Y114.37 from Y112.91. The U.K. pound was at $1.5590 from $1.5485. The dollar was at CHF1.0600 from CHF1.0485.The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.138 from 82.022.To see the euro's move against the dollar, please see:http://dowjoneswebservices.com/chart/view/4315U.S. consumer confidence declined in July, according to the Conference Board, a private research group. The July reading, which slightly missed economists' expectations, was the lowest since February."The summer of misery for the U.S. consumer continues," said David Semmens, U.S. economist at Standard Chartered Bank in New York.Earlier, a better-than-expected reading on consumer sentiment in Germany helped fuel the euro's gains, which also sent the dollar to its lowest level since May against a basket of its competitors.Despite Tuesday's fall from its 11-week high, the euro hung in against the dollar as it continues to benefit from easing concern over the euro-zone sovereign-debt crisis. The release last week of the results of stress tests of European banks helped shore up confidence in the region's financial sector, which investors worried would become hobbled by exposure to the region's sovereign debt.Strong earnings from European companies are illustrating that a weakened euro is not bad for all of the euro zone, said Nick Parsons, global head of foreign exchange strategy at National Australia Bank in London."The focus on the euro over the last four months has been concerns about sovereign defaults," Parsons said. "What's been generally forgotten are the real benefits to Northern Europe that come from exchange-rate weakness," noting a cheaper euro makes euro-zone exports less expensive.With the ICE Dollar Index strengthening, Deutsche Bank's PowerShares U.S. Dollar Index Bearish exchange-traded fund was down 0.15% from late Monday, while its PowerShares U.S. Dollar Index Bullish was up 0.17%. The two exchange-traded funds are based on Deutsche Bank's currency futures indexes, whose composition mirrors that of the ICE's Dollar Index.

2010/07/28 02:37DJ Local Government Job Cuts Could Approach 500K By 2012 - Report
WASHINGTON -Local governments across the U.S. could see nearly 500,000 job losses between 2010 and 2012 as the recession takes its biggest bite out of their finances, a report released Tuesday projects."Just as families are increasingly turning to local governments for support, local governments are facing their own fiscal crisis," the National League of Cities, National Association of Counties and U.S. Conference of Mayors wrote.The groups are pushing the federal government to provide more support to the economy, particularly for job creation and preservation efforts and for infrastructure projects.Such investments "will help stabilize communities across the country and ensure that all of America's families are able to participate in the economic recovery," the report said.The report is based on a survey of officials in 214 cities and 56 counties who expect to cut jobs across the spectrum. Dallas, for example, expects to lay off 500 employees - the equivalent of 4% of the city's workforce. Florida's Brevard County estimates it will have to lay off 118 workers and hold back on filling another 86 openings as it budgets shrinks by about 14%. Among the county's casualties: 31 sheriff's deputies."Local governments typically seek to shield direct services to residents from cuts during economic downturns and the cuts occurring in these services are indicative of the depth of the recession's impact on cities and counties," the report said.The cuts come as local governments' tax collections have fallen and as demand for social services has risen, situations that are only expected to worsen in the near-term. "The consequences of the recession will be playing out in America's local communities for years to come," the groups' wrote.A separate report from the National Conference of State Legislatures' on Tuesday showed state governments are suffering alongside cities and counties, despite gaining tax revenues. That report said U.S. states are facing a collective budget gap of nearly $84 billion for fiscal year 2011."State lawmakers are going to need extra stamina to push through this next round of budget challenges," William T. Pound, NCSL's executive director said.

2010/07/28 00:56=DJ DATA SNAP: French Jobless -0.3% In June, First Drop Since March
PARIS -The number of jobless people looking for work and unable to find it in France eased in June for the first time since March, as the longtime trend in rising unemployment continued to fluctuate.Joblessness edged 0.3% lower in June to 2,691,000 million people from May's 2,699,600, the government's Pole Emploi division and DARES employment statistics agency said Tuesday.June's figure was still up 6.9% on the year, though, reflecting the fact that unemployment remains stubbornly high. The modest economic recovery has so far been insufficient to create enough jobs to absorb many of those seeking work.Government officials have been forecasting that French unemployment will peak and begin receding later this year. Exactly when isn't clear.But the ouklook isn't bright. Private economists expect as little as 1% economic growth in France this year--which would still be an improvement on the 2.5% contraction in gross domestic product in 2009. The government is holding to its forecast of 1.4% GDP growth in 2010.Overall, joblessness eased by 1% in June for men of all ages and rose 0.4% for women. But men under 25 years old were the biggest beneficiaries. Women under 25 years also saw their jobless totals drop.The government has actively been trying to get the young into jobs. However, the unintended impact of incentives for hiring youths has been a sustained rise in joblessness of those over 50 years old.This was the case again in June, when the number of unemployed people over 50 rose 1.7% on the month and 19.1% on the year.

2010/07/28 00:26DJ Chicago Fed Midwest Manufacturing June Index Slips, But Up From Year Ago
CHICAGO -An index measuring manufacturing activity in the midwestern U.S. slipped in June, another sign that the nation's economic recovery lost some momentum this spring.However, the latest Midwest Manufacturing Index, released Tuesday by the Federal Reserve Bank of Chicago, represents significant improvement from very weak levels from one year ago.The index fell 0.5% in June to a seasonally-adjusted level of 79.4. The Chicago Fed revised downward its May reading to 79.7, from an original estimate of 86.7.Regional production was up 13.2% compared to the same time a year ago. Nationwide, overall output was up 8.9%.The Chicago Fed calculates the regional index by keeping track of the number of hours worked in the heavily industrialized states of Illinois, Michigan, Indiana, Wisconsin, and Iowa.Two of the four major sectors that make up the index registered monthly declines in June, with auto output edging down 0.2% after a 3.0% gain in May. For the year, Midwestern auto production jumped 36.2%. Nationally, auto-making was down 0.4% for the month, but up 17.1% compared to the same time last year.Midwestern resource output dropped 1.4% in June, after a 0.5% rise in May. Four of the sub-categories posted monthly output declines--food, wood, paper, and chemical production. Non-metallic production increased during the month.Compared to June 2009, regional resource output increased 4.2%. On a national basis, monthly resource production fell 0.8%, but was 3.1% higher compared to the same time a year ago.The Chicago Fed reported regional steel production climbed 0.9% in June on the heels of a 3.0% gain in May. For the year, Midwest steel output soared 25.1%, better than the 15.6% increase nationwide. June alone, national steel production was up 1.1%.Machinery output climbed 0.6% in the Midwest during June, following a 1.3% increase in May. June machinery production in the Midwest improved by 6.8% compared to the same period a year ago. Nationally, machinery output edged up 0.5% in June, and was 14.8% higher compared to June of last year.The Chicago Fed is scheduled to release its July manufacturing index on Aug. 26 at 12 p.m. EDT.