Market Rumours

2010/08/11 19:02DJ Japan Finance Minister Noda: Watching Yen Very Closely
TOKYO -Japan's finance minister repeated Wednesday that he is watching the yen's moves very closely, but he declined to comment on whether he intends to intervene in the foreign exchange market to arrest the currency's rise. 'I am watching this development extremely closely,' Yoshihiko Noda told reporters in the Ministry of Finance after the dollar fell below the psychologically important Y85.00 mark to Y84.98 earlier in the day. The consistent tone of his remarks over recent days suggests Japan is still a few steps away from intervening in the currency market to sell the yen, a step not taken since spring 2004.

2010/08/11 19:01*DJ US MBA Refinance Index +0.6% At 3,993.0; Last Week 3,969.0
2010/08/11 19:00*DJ US MBA Market Index +0.6% At 734.3; Last Week 730.2
2010/08/11 19:00*DJ US MBA Purchase Index +0.3% At 175.4; Last Week 174.9

2010/08/11 18:55DJ BOE King: Monetary Policy Committee Hasn't Gone Soft On Inflation
LONDON -Bank of England Governor Mervyn King said Wednesday that the Monetary Policy Committee hasn't 'gone soft' on inflation, despite the fact that price growth has been above target for much of the past few years. In a press conference following the release of the MPC's quarterly Inflation Report, King underscored that high consumer price inflation--which has been over the 2.0% target in 41 months out of the past 50--was a product of temporary price shocks. He also said there was no evidence that the recent volatility in price growth had impacted medium-term inflation expectations, and that they had remained close to their long-term average. 'Over the past three years, inflation has been volatile and above the target for much of the time,' King said. 'That does not mean that the MPC has taken its eye off the inflation ball, nor has it gone soft on inflation.'

2010/08/11 18:23DJ BOE: UK Economy Set To Expand At Slightly More Modest Pace
LONDON -The Bank of England said Wednesday that the U.K. economy is likely to expand at a slightly more modest pace than previously forecast, because of fiscal austerity measures, but maintained a bullish view of growth prospects. In its quarterly Inflation Report, the Monetary Policy Committee said price growth would remain above its 2.0% target for the whole of next year, pushed up by an upcoming rise in sales tax, and warned of a possible knock-on effect on public inflation expectations. But it said inflation would fall below target in early 2012 and would stay under that level until mid-2013. The BOE's forecasts show growth averaging around 3% over the medium term and are strikingly more optimistic than official projections from the Office for Budget Responsibility for growth of 2.3% in 2011 and 2.8% in 2012. Those forecasts were based on the GBP113 billion of fiscal tightening by 2015 the government promised in June. The U.S. Federal Open Market Committee Tuesday acknowledged that the pace of the U.S. economic recovery has slowed, and agreed to reinvest proceeds from expiring mortgage-backed securities into long-term Treasurys to help keep mortgage rates low, in what could be a step toward further easing. The BOE indicated that it was keeping its options open, given the huge uncertainty surrounding prospects, and said it stood ready to respond in 'either direction'--through tightening or loosening--to risks as they evolved.

2010/08/11 17:44*DJ BOE King:Great Uncertainty About Outlook For US, Euro Zone
2010/08/11 17:43*DJ Sep Gilts Hit 123.18 Contract High On BOE Inflation Report
2010/08/11 17:43*DJ FTSE 100 Dn 1.5%, Dips Below 5300 On BOE Inflation Report
2010/08/11 17:43*DJ 10Y Gilt/Bund Yield Spread Tighter On BOE Inflation Report
2010/08/11 17:42*DJ BOE: May Take Some Time For Weaker GBP To Boost Exports
2010/08/11 17:42*DJ BOE King:Economic Recovery Likely To Be Choppy
2010/08/11 17:41*DJ BOE Sees Risk That Inflation Expectations Will Rise
2010/08/11 17:41*DJ BOE:Inflation To Stay Above 2% For Longer Than Forecast In May
2010/08/11 17:40*DJ BOE: Inflation To Fall Below 2% In First Quarter Of 2012
2010/08/11 17:40*DJ BOE Signals Unlikely To Tighten Before 2Q 2011
2010/08/11 17:40*DJ BOE: Inflation To Remain Below 2% Through 2012, 1H 2013
2010/08/11 17:39*DJ BOE:Forecasts Assume Rate Hike Every Two Quarters From 2Q 2011
2010/08/11 17:36*DJ BOE: Growth May Weaken In 2H 2010 As Confidence Wanes
2010/08/11 17:35*DJ BOE Sees Growth Around 3% YY Over Forecast Period
2010/08/11 17:34*DJ BOE: Downside Risks To Growth Forecast Smaller Than In May
2010/08/11 17:33*DJ BOE Lowers Growth Forecasts For UK Economy, Citing Budget

2010/08/11 17:26=DJ DATA SNAP:UK ILO Unemployment Posts Largest Fall In Three Years
LONDON -The U.K.'s two main measures of unemployment fell again in July, while the number of employed people rose to the highest level in more than a year, data showed Wednesday. The Office for National Statistics said the international measure of unemployment, formerly known as the International Labor Organization measure, fell for a second straight month and by 49,000 in the three months to June to total 2.457 million. That was the largest decline since June 2007 and saw the unemployment rate remain unchanged at 7.8% from the three months to May, the ONS said. The ILO measure of employment was also more upbeat for a second month, rising 184,000 in the three months to June to total just over 29 million. That represented the sharpest increase since May 1989 and the highest level since April 2009. The widely-watched claimant count measure of unemployment fell for a sixth straight month in July but by just 3,800. That was the smallest fall in the recent run of declines and saw the jobless rate remain at 4.5%. That compared with a revised 15,900 drop and a rate of 4.5% in June. The size of the drop came as a surprise as economists surveyed by Dow Jones Newswires last week had forecast a fall of 16,000 and a rate of 4.5%. The ONS revised its claimant count estimate for June after originally reporting a decrease of 20,800. Average weekly earnings excluding bonuses--bonus payments can cause steep fluctuations in monthly changes--rose 1.6% in the three months to June. That was the lowest increase since January this year and compares with a 1.8% rise in the May survey, the ONS said. That was broadly in line with expectations for a rise of 1.5%.

2010/08/11 16:53DJ 0IL DATA: Threat Of Weaker Economic Recovery Poses Oil Demand Risk-IEA
LONDON--The International Energy Agency Wednesday cautioned that world oil demand could take a substantial hit in the months ahead should economic growth falter, as some economists expect. 'The short-term global economic outlook is highly uncertain, presenting significant downside risks to future oil demand growth,' the Paris-based agency said in its monthly oil market report. The global economy is expected to grow by 4.5% this year and ease to 4.3% in 2011 but if growth rates were to stumble by about 30%, world oil demand would be expected to slide by 300,000 barrels a day this year and by a large 1.2 million barrels a day in 2011, the IEA said. David Fyfe, who heads up the IEA's oil markets' team, called those oil-demand projections 'what-if' scenarios aimed at simply demonstrating the downside risks. 'We stand by our baseline assessment for a recovery in oil demand, but there remains a lot economic uncertainty in the short term and we recognize that,' Fyfe said. The IEA, energy advisor to many of the world's biggest energy consumers such as the U.S., made slight upward revisions to world oil demand this year and for 2011, but those were based on revisions to historical oil demand data and on International Monetary Fund forecasts issued almost four weeks ago. Since that time, economic news in places like the U.S. has gotten gloomier. Highlighting that, the U.S. Federal Reserve Tuesday said after its policy meeting that the pace of economic recovery had slowed in recent months and was expected to be 'more modest in the near term' than it had thought.

2010/08/11 16:48*DJ Japan Fin Min Noda: No Comment On Whether To Intervene
2010/08/11 16:45*DJ Japan Fin Min Noda: Watching Yen Very Closely

2010/08/11 16:32*DJ UK 3 Mos To May Avg Earnings Unchanged At +1.8%
2010/08/11 16:31*DJ UK 3 Mos To Jun Avg Earnings Was Forecast +1.5%
2010/08/11 16:31*DJ UK ILO 3 Mos To Jul Unemployment -49,000, 7.8% Rate
2010/08/11 16:31*DJ UK 3 Mos To Jun Average Earnings +1.6%
2010/08/11 16:30*DJ UK Jul Adj Jobless Claimants Was Forecast At -16,000
2010/08/11 16:30*DJ UK Jul Adj Claimant Rate Was Forecast 4.5%
2010/08/11 16:30*DJ UK Jul Adj Jobless Claimant -3,800 At 4.5% Of Workforce

2010/08/11 15:28DJ JGBs Rally As Weak Equities, Strong Yen Fuel Safe-Haven Demand
TOKYO -Japanese government bonds rallied Wednesday as falling share prices and a strong yen fueled demand for safe-haven assets, while a well bid auction of 5-year notes confirmed solid demand from domestic banks that should continue to support JGBs in the months ahead. JGBs also got a boost from a rise in U.S. Treasurys after the Federal Reserve on Tuesday announced a step to keep its balance sheet from shrinking and acknowledged the U.S. recovery is slowing. The move fueled speculation that the Bank of Japan, which left its policy unchanged Tuesday, could take more easing action of its own in the coming months. Such speculation is likely to help JGBs in the near term, analysts said. "The Fed's move has added to the view that the Bank of Japan could take more easing action sometime in the coming months, and that's supportive of JGBs," said Akito Fukunaga, chief rates strategist at the Royal Bank of Scotland. JGBs will likely trade with an upward bias for the rest of the week, he said. Lead September JGB futures, which closed up 0.23 at 142.16 Wednesday, could rise to 142.70 by the weekend, refreshing the seven-year high of 142.33 hit last week, Fukunaga said. The yield on the benchmark 10-year JGB could fall to 0.95%. Bond yields move inversely to prices. The Fed's policy-setting Open Market Committee decided Tuesday to reinvest proceeds from expiring mortgage-backed securities into long-term Treasurys. The step could also help JGBs by pushing the dollar even lower against the yen. While U.S. yields are already very low, the move will keep them under downward pressure, likely weighing on the dollar against the yen, to the detriment of Japanese equities and benefit of safe-haven JGBs, analysts said. Meanwhile, an auction of 5-year Japanese government bonds went smoothly Wednesday despite the coupon being set at a seven-year low as demand from banks, flush with cash due to low lending, remained strong. Data released earlier Wednesday highlighted a major factor behind the low level of lending. Core machinery orders, a gauge of business investment, rose 1.6% on-month in June, missing expectations for a 5.5% gain. That underscored how the uncertain economic outlook has made firms hesitate to ramp up spending, which would require more borrowing. Japan's Ministry of Finance sold Y2.186 trillion of the five-year JGBs at a lowest price of 99.87 yielding 0.327%. The result was stronger than traders' expectations for a lowest price of 99.85-99.86. The average price was 99.88, yielding 0.325%. "The result topped expectations, which were already quite strong," due in large part to demand from Japanese banks and other investors, said Royal Bank of Scotland's Fukunaga.

2010/08/11 15:26DJ Tokyo Shares End At 3-Week Low On Weak Data, Stronger Yen
TOKYO -Tokyo stocks fell Wednesday to a three-week low as weak machinery orders data combined with more yen strengthening to send currency-sensitive shares, such as Fanuc and Honda Motor, to sharp losses. The Nikkei 225 Stock Average fell 258.20 points, or 2.7%, to 9292.85, its sharpest loss both in point and percentage terms since July 16. The Topix index of all the Tokyo Stock Exchange First Section issues fell 20.23 points, or 2.4%, to 834.45, with 32 of 33 Topix subindexes closing in negative territory.Stocks opened lower from the start following the U.S. Fed's overnight decision to purchase more Treasurys, its less optimistic commentary on the nation's economic recovery, and weaker-than-expected June machinery orders, all of which soured sentiment toward equities.Additional data from China published during the midday break--including July CPI figures--while largely in line with consensus estimates, provided little comfort over the reduced prospects for further monetary policy tightening.'There is still an ample chance that markets will push the yen higher, prodding (governments) for a stronger macroeconomic policy response,' said Yoshinori Nagano, senior strategist at Daiwa Asset Management.TSE first section volume, which totaled just 1.58 billion shares, wasn't overly robust given the anticipation and volatility seen in share price movements on the day.Machinery-related stocks were especially hard-hit, with industrial robot maker Fanuc dropping 4.4% to Y9,670, construction machinery maker Komatsu losing 2.8% to Y1,796, and Okuma slipping 5.2% to Y452.Honda also fell 3.3% to Y2,779 and Sony slid 2.8% to Y2,606, as both were hurt by the weaker dollar.Chip-related shares also tumbled on a cloudy outlook for PC orders, which was reinforced after Baird cut its investment rating on Intel to Neutral from Outperform. Tokyo Electron lost 3.3% to Y4,035, while Advantest slipped 2.8 to Y1,779. Semiconductor package maker Shinko Electric surrendered 4.2% to Y917.'The broader macroeconomic outlook is highly uncertain, so it's easy for sentiment to turn extremely pessimistic (on chip stocks),' said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.Yokogawa Electric and All Nippon Airways were the only Nikkei components to finish with gains, closing up 1.2% to Y513 and up 0.7% to Y308, respectively. Yokogawa buyers were encouraged by the firm's first-half earnings outlook showing that it expects a sharply reduced net loss on year, helped by cost-cutting.A Morgan Stanley MUFG Securities analyst wrote in a client report that expectations for a V-shaped recovery from March 2011 aren't yet fully priced into ANA's shares, and that scope exists for further earnings upside beyond consensus estimates.September Nikkei 225 futures closed down 260 points, or 2.7%, at 9280 on the Osaka Securities Exchange.

2010/08/11 15:01DJ Forex Options: Dollar/Yen Options Up As Dlr Falls Near Key Y85
TOKYO -Dollar/yen currency options rose in Asia Wednesday as market participants bought dollar-put/yen-call options to hedge against further drops in the dollar.The dollar fell to as low as Y85.19, near the eight-month low of Y85.02 marked Friday. The decline came after the Federal Reserve announced overnight it would reinvest the proceeds from expiring mortgage-backed securities into U.S. Treasurys, while noting that the U.S. economic recovery is slowing.Benchmark one-month at-the-money volatilities stood at 11.05%/11.75% from 10.80%/11.50% Tuesday in New York. As of 0530 GMT, the dollar stood at Y85.24.Demand for downside protection may remain heavy as long as the spot stays around the psychologically significant Y85.00, and this could curb any sharp falls in the implied volatilities, said a brokerage options trader.On the view that the Australian dollar may fluctuate sharply amid the recently volatile market, one player purchased Australian dollar/yen at-the-money straddles at 12.8% and 12.9%, with the amount of deal and the terms unknown, a brokerage options trader said. Such contracts benefit from greater volatility.Elsewhere, one player bought one-week dollar-call/yen-put options with a Y86.50 strike price and a $50 million face value at 11.65%. A dollar-call option makes money for the buyer if the greenback rises above the strike price.

2010/08/11 13:38DJ BOJ Leaves Economic Assessment Unchanged In August Report
TOKYO -The Bank of Japan said the nation's economy 'shows further signs of moderate recovery' in August thanks to improvements in overseas economies, keeping its assessment unchanged for the third straight month since upgrading it in May. In its monthly economic report released Wednesday, the BOJ also said, 'Japan's economy is likely to recover at a moderate pace.' The central bank restated its optimistic views on key economic elements, saying uptrends in exports and industrial production are likely to continue. It also expects domestic demand to keep improving, though at a moderate pace, and said severity in the employment situation has eased somewhat. On Tuesday, the BOJ's policy board decided to leave its policy interest rate at 0.1%, unchanged since December 2008. But analysts say the central bank may resort to more aggressive easing should the country's export-dependent economy look increasingly threatened by, for instance, another slump in the U.S. economy. Such a development would raise the value of the yen against the dollar, making Japanese goods more expensive overseas, and reducing exporters' profits when converting dollar-denominated income into yen.

2010/08/11 12:20=DJ WORLD FOREX: Euro Hits 3-Week Low Vs Yen On Global Economic Worries
TOKYO -The euro fell to a three-week low against the yen in Asia Wednesday as remarks from Federal Reserve officials overnight fueled worries over the outlook for the U.S. and global economies, prompting U.S. banks and Asian short-term players to buy the safe-haven Japanese currency. The euro slipped to as low as Y111.70 Wednesday morning in Asia, its lowest level since July 23, from Y112.58 in New York Tuesday. As of 0250 GMT, the single currency had rebounded slightly to Y111.94. Against the dollar, the euro stood at $1.3118 from $1.3187. The Fed announced Tuesday they it would reinvest proceeds from expiring mortgage-backed securities into U.S. Treasurys, in a move aimed at supporting the country's weakening economy by keeping borrowing rates low for consumers and companies alike. But the Fed's move served to increase concerns about a slowdown in the U.S. economic recovery, traders said, weighing on currency market sentiment and prompting Asian players to buy the safe-haven yen. Downturns in regional stock markets also helped the yen's rise, they said. The Nikkei Stock Average was down 2.3% in Tokyo during the morning session, while stock markets in Australia, South Korea and New Zealand also fell. 'The euro's stop-loss sell-orders were triggered around Y112.00, lifting the yen broadly against major counterparts' including the Australian dollar and pound, said a senior trader at a major Tokyo bank. Meanwhile, the dollar fell to as low as Y85.19 Wednesday, compared with Y85.35 in New York Tuesday, before recovering to Y85.40 as of 0250 GMT. The dollar gained against major rivals except the yen due to lingering flight-to-quality sentiment among investors. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 81.153 from 80.762. Looking ahead, market participants will focus on developments in stock markets, as well as U.S. economic data to gauge the health of the world's largest economy, traders said. The euro may fall to Y110.00 and $1.3000 in the week ahead if U.S. data come in weaker than expected, pushing down shares and denting risk-tolerance further, they said. Key data include the consumer price index for July and the University of Michigan preliminary consumer sentiment index for August, both due Friday. Economists polled by Dow Jones Newswires expect the CPI to rise 0.3% in July from a 0.1% decline in June.

2010/08/11 11:24DJ Obama Signs $26 Billion State Aid Package Into Law
WASHINGTON -President Barack Obama signed into law a package of $26 billion in aid for state and local governments, following House approval of the package Tuesday. The new law includes limits on foreign tax credits that will cost U.S. multinational firms nearly $1 billion a year in additional taxes, according to the official estimate from Congress's Joint Committee on Taxation. House Speaker Nancy Pelosi (D., Calif.) called back into session lawmakers who had just begun their six-week-long summer recess in order to cast the vote. Democrats see the legislation as politically important for them, as it benefits key constituencies, including public-sector workers and labor unions. But to pay for it, they handed a hefty tax bill to U.S. companies with units overseas that have been able to pay a lower corporate income-tax rate on profits derived from their foreign businesses. The House voted 247-161 to approve the legislation, in a vote that was almost exclusively along party lines, with just two Republicans joining all but three Democrats in favor of the measure. The Republicans in favor were Reps. Michael Castle (R., Del.) and Anh 'Joseph' Cao (R., La.), while the Democrats opposed were Reps. Bobby Bright (D., Ala.), Jim Cooper (D., Tenn.) and Gene Taylor (D., Miss.). Republicans angrily decried the bill, arguing it was a case of Democrats accruing more debt in order to reward their political allies. This is 'blue-state, big-city politics at its worst,' Rep. Jack Kingston (R., Ga.) said on the House floor during the debate on the bill. Democrats countered that the money would provide vital aid to states struggling with rising Medicaid costs, and would help local governments to avert public-sector layoffs in the autumn. House Ways and Means Committee Chairman Sander Levin (D., Mich.) said the move to close the tax loophole 'used by a few is fair taxation for everybody else.' The legislation will provide $16 billion in aid to help states pay rising Medicaid costs. Current federal funding for the expansion of the program, which provides health care for the poor, expires at the end of the year. The law will continue the funding through the first six months of 2011. The bill will steer a further $10 billion to local governments to help them avert layoffs of teachers and other public-sector workers such as firemen and police officers. Democrats said the legislation will enable state and local governments to avert layoffs or to create 290,000 public-sector jobs this fall. The legislation's full $26 billion cost is offset by tax increases or spending cuts elsewhere in the federal budget. The foreign-tax credit limits will increase government revenues by $9.6 billion over the next 10 years. The bill also ends early an increase in food-stamp payments that was part of economic-stimulus legislation. Senate lawmakers approved the legislation before they began their summer recess last week.

2010/08/11 10:59=DJ FED WATCH: Portfolio Switch A Modest Action, With Uncertain Benefits
NEW YORK -The decision Tuesday by the Federal Reserve to keep the size of its massive securities portfolio steady is largely a symbolic gesture that may have no lasting economic impact.At its policy meeting, central bankers went some distance toward meeting widespread market expectations they would take additional action to help keep a faltering recovery from running out of steam.A number of choices laid before policy makers, none of them particularly appetizing. The Fed decided to reinvest the proceeds of its maturing mortgage securities into Treasury debt, in a bid to keep its so-called System Open Market Account at just over $2 trillion. It will mostly purchase securities in the two-to-10-year range, although it is open to buying other maturities, as well as inflation-indexed bonds.There are real questions whether the action will help the economic recovery. Keeping the portfolio near current levels is largely an effort to keep long-term borrowing rates low for home buyers and corporations.But these rates are already near historic lows, and they managed to get there even after the Fed stopped its large-scale buying of mortgage debt. It's unclear how much the central bank can influence these rates at this point, and given the size of the purchases it would take to move the needle on yields, Tuesday's announcement is small potatoes.If the economic impact of the action is likely small, then what the Fed did was likely a play to show that, yes, they are doing something.That could backfire. Stone and McCarthy Research Associate's Ray Stone called the move an 'unnecessary concession to the markets.'Wrightson ICAP's economists were similarly dismissive, saying, 'the Fed has more faith in token gestures than we do.' They believe the rationale for the action is hard to fathom, explaining 'we are assuming that the Fed will present this as an effort to hold interest rates down rather than to stabilize the supply of bank reserves.'Wrightson said 'it is possible that the [coming FOMC] minutes will suggest that different members of the committee backed the decision for different reasons.'The Fed may have pursued this path simply because there is nothing else they could really do absent a very large shift in policy. But that's a path they are not prepared to take, especially since policy makers retain their faith the recovery will continue.Interest rates can't go lower. The idea of ending the payment of interest on reserves has gone in and out of vogue, with some believing the move would drive the $1 trillion banks now have parked at the Fed back into the real economy. That action would come with considerable technical challenges for financial markets, and there's no certainty banks would even want to lend the money out, given the economy's troubled state.The Fed could also restart buying assets on a big scale, taking large amounts of mortgages and Treasurys again, although that may be more medicine than the economy needs. Those actions could also call into question the central bank's commitment to stable prices, complicating future policy choices on a whole new front.There was one other largely symbolic gesture for the Fed to show it was doing something without having to actually do much. It could have made an even more explicit commitment to keep interest rates very low for an 'extended period,' in a bid to condition market expectations. It's where the Fed could go next if it needs to signal an even deeper commitment to keep the recovery in place.

2010/08/11 09:10DJ Japan Fin Min Noda: To Closely Watch Forex Market
TOKYO -Japanese Finance Minister Yoshihiko Noda said Wednesday he will keep watching dollar/yen moves closely following the U.S. Federal Reserve's monetary policy decision overnight. 'Currency moves after the Fed's decision appear a little one-sided. Excessive foreign exchange moves are bad for the economy, so I will keep closely monitoring the market,' Noda told reporters. Overnight, the U.S. Federal Reserve acknowledged a slowdown in the pace of the economic recovery, and moved to prevent the Fed's huge balance sheet from shrinking in an attempt to support the economy. Noda's cautious tone on the yen's strength is similar to that before the Fed's decision, suggesting Japan's currency authorities are still several steps away from taking action in the foreign exchange market to stop the yen's rise.

2010/08/11 08:35DJ Barclays Capital Expected To Lay Off Several Hundred -FT
Barclays PLC's (BCS, BARC.LN) investment banking arm, Barclays Capital, is expected to lay off several hundred employees, affecting sales and trading staff and back-office operations, the Financial Times reports late Tuesday on its website, citing people close to the bank.An announcement of the layoffs could come as soon as Wednesday, the U.K. newspaper says.Full story at: www.ft.com/cms/s/0/05b4ac82-a4be-11df-8c9f-00144feabdc0.html

2010/08/11 08:34*DJ Euro Falls Below Y112.00 On EBS, Lowest Since July 23

2010/08/11 08:21DJ Japan Jun Core Machinery Orders +1.6% On Mo; Expected +5.5%
TOKYO -Japanese core machinery orders rose a seasonally adjusted 1.6% in June from the previous month, Cabinet Office data showed Wednesday, marking the first gain in two months. The rise was smaller than expected by economists surveyed by Dow Jones Newswires, who on average forecast that core orders would rise 5.5% from the previous month. Orders fell 9.1% in May. Core orders rose 0.3% in the April-June period from the previous quarter, marking the third straight quarterly increase, falling short of the Cabinet Office's forecast for a 1.6% gain. The Cabinet Office said it expects core orders to climb 0.8% from the previous quarter in the July-September period. Machinery orders are regarded as a leading indicator of corporate capital investment. Core orders exclude those from electric power companies and those for ships, which are often a source of volatility in the overall data due to their large sizes. Unadjusted for seasonal factors, core orders fell 2.2% in June from the year-earlier month, the data showed.

2010/08/11 07:00DJ CREDIT MARKETS: Issuance Active; Treasurys Rally on FOMC
It was another active day in credit markets Tuesday, as corporate issuers brought a healthy amount of debt to market.Issuance in the high-grade space was highlighted by offerings from two more energy companies, Statoil ASA and Great Plains Energy Inc., following Monday's debt sales from Anadarko Petroleum Corp. and NuStar Logistics. In high-yield, the largest of a slew of offerings came from Goodyear Tire, which brought a $750 million offering of 10-year notes via Deutsche Bank.Meanwhile, Tuesday afternoon, Treasury prices soared after the Federal Reserve vowed to provide additional support to the wobbly U.S. economy. At the end of their one-day policy meeting, the Fed said it would reinvest proceeds from expiring agency debt and mortgage-backed securities into Treasurys to keep long-term borrowing costs for businesses and consumers low. Still, the U.S. central bank's outlook on the economy was muted.Together, those two factors could mean "mixed pressures" for credit markets, said Guy Lebas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. The Fed has a "downbeat outlook on economic conditions, but a willingness to support the economy against that outlook."In the wake of the FOMC announcement Tuesday, investment-grade and high-yield credit indexes both showed slight improvements, but remained wider on the day. Investment-Grade Corporates Tuesday marked a somewhat slower day in the investment-grade space compared to the breakneck pace of issuance in recent weeks. Companies and investors were hesitant to make bold moves ahead of an afternoon announcement from the Federal Reserve Board's Federal Open Market Committee, said James Lee, senior fixed-income analyst at Calvert Asset Management. Still, Lee expects a steady stream of issuance in the coming days. "Both high yield and high grade are going to be active," he said. "With rates so low, it's very cheap money for the companies." After Monday's issues by Anadarko Petroleum and NuStar Logistics, two more energy companies sold high-grade debt Tuesday: Norway's Statoil ASA issued $2 billion in seven-year and 30-year paper, and Kansas City, Mo.-based Great Plains Energy sold $250 million in three-year notes. Statoil sold $1.25 billion in seven-year notes at 0.95 percentage point over Treasurys, compared to initial price guidance of 1.0 percentage point, while $750 million in 30-year notes were sold at 1.15 percentage points, versus guidance of 1.2 percentage points. Great Plains Energy sold its 2.75% notes at 99.954 to yield 2.766%, or 1.95 percentage points over Treasurys, compared to price talk in the area of 2.0 percentage points. The proceeds will be used to make a loan to its subsidiary, the Greater Missouri Operations Company. Cleveland-based financial services company KeyCorp [formerly known as Society Corporation] increased its issue of five-year notes to $750 million from $500 million. The 3.75% notes sold at 99.878 to yield 3.777%, or 2.25 percentage points over Treasurys, compared to guidance in the range of 2.25-2.375 percentage points. DirecTV Financing Co., an affiliate of DirecTV Holdings LLC, was also in the market with a three-part benchmark offering comprised of 5.5-year, 10.5-year and 30-year paper. In secondary markets, financial institutions continued to dominate, with recently issued paper from Morgan Stanley and Citigroup the most active. Morgan Stanley's 5.5% bonds due July 2020 traded 7 basis points wider on the day, while Citigroup's 5.375% bonds due August 2020 traded 6 basis points wider. Countrywide Financial Corp.'s 5.8% bonds due June 2012 were 33 basis points wider. Meanwhile, Markit's CDX NAIG 14 improved slightly after the Fed announced it would take steps to prevent further weakening of the economic recovery, though it remained wider on the day. By late afternoon, the benchmark credit derivatives index was at 104.57 basis points, 2.54 basis points worse than Monday's close. The index had widened 3.68 basis points to 105.71 basis points ahead of the announcement as investors prepared for a dovish report. Due to nerves, "investors were keen to reduce long risk positions," wrote Gavan Nolan, credit analyst at Markit in London, in a note.

2010/08/11 05:46=DJ ABC Consumer-Confidence Index Holds Steady After 7-Week Slide
U.S. consumer confidence held steady in the week ended Sunday according to an ABC News index, ending a seven-week slide in which the metric fell nine points to its unofficial "death zone."But the weekly index of -47 is still dismal, and is worse than the 2010 average of -46.According to individual gauges, 90% of Americans say the U.S. economy is in bad shape, with three-fourths saying it's a bad time to spend money and 55% rating their personal financial situations negatively. Underscoring the public's long-running economic pain, majorities have rated their own finances negatively in all but three weeks out of the last two years.In a week in which President Barack Obama highlighted his goals for higher education, the index shows the impact of educational attainment on consumer sentiment. The index is -66 among Americans who lack a high school diploma, and -58 among those who stopped after high school. Among those who've at least started college, it's -33.The index is based on a random survey of 1,000 respondents nationwide. The index measures typical Americans' confidence in three areas: the national economy, their finances and their willingness to spend money, according to the report. The poll has a margin of error of plus or minus three percentage points.The index is derived by subtracting the negative response to each index question from the positive response to that question. The three resulting numbers are added and divided by three.