Money Market News

Global Economy Bernanke Cut Rates Stokes Price Federal Reserve Chairman Ben S. Bernanke's readiness to cut interest rates to avert a recession is stoking concerns that prices will get out of hand. Investors' expectations for inflation over the next 10 years jumped to the highest since June after Bernanke pledged to the House Financial Services Committee to act in a ``timely manner'' to combat ``downside risks'' to growth. A day after government figures showed wholesale costs rose 7.4 percent in January from a year ago, Bernanke said the price outlook has deteriorated ``slightly.'' Rising consumer prices, the ``classic bond worry,'' may start exceeding concerns about the stresses in credit markets, Lehman Brothers Holdings Inc.'s fixed-income strategy team said in a note to clients yesterday. ``We'd nominate the unmooring'' of inflation expectations ``as a prime risk for 2009-2010,'' ...

Global Economy Fed's Focus Still On Housing, Credit Markets Federal Reserve Chairman Ben Bernanke said the U.S. central bank will act as needed to ensure housing and credit markets do not further undermine an already sluggish economy, evaluating information bearing on the economic outlook and acting in a timely manner as needed to support growth and to provide adequate insurance against downside risks. Bernanke's comments suggested the Fed is prepared to reduce borrowing costs further, even though he also said the central bank had to keep a close watch on prices. The Fed has lowered interest rates to 3 percent from 5.25 percent since mid-September and financial markets expect The Fed to lower the rate 50 basis point at their meeting on March 18. Bernanke said that while the central bank expects inflation to moderate, there was a risk price pressures could remain elevated. But if the public began to doubt the Fed's willingness to take measures to keep inflation at bay, it co...

Global Economy U.S. Economy: Confidence Falls, Producer Prices Rise U.S. consumer confidence fell to the lowest level in five years and wholesale inflation picked up, limiting the Federal Reserve's room to maneuver as it tries to avert a recession. The Conference Board's index of confidence dropped to 75.0 in February, lower than forecast, from 87.3 in January. The Labor Department reported that prices rose 1 percent last month. Excluding food and energy, expenses climbed 0.4 percent, the most in almost a year. Market Reaction Stocks fell, government bonds rose and the dollar extended its decline. The S&P500 Index dropped as much as 0.6 percent. Ten-year note yields fell to 3.86 percent and the dollar lost 0.4 percent to $1.4884 per euro. The share of consumers who said jobs are plentiful declined to 20.6 percent. Those saying jobs are hard to get increased to 23.8 percent. The proportion of people who expect their incomes to rise over the next six months decreased to 17.0 ...

China's stocks fell, dragging the nation's benchmark to a three-week low, on speculation new shares will dilute existing holdings and after the central bank said it will continue to order banks to set aside more reserves. Dow Jones Industrial Average and S&P 500 rising after a CNBC report that progress is being made on a recapitalization plan that could save troubled bond insurer Ambac Financial's triple-A rating. Asian financial shares rallied in the morning session Monday, pushing up stocks and denting bonds across the region, with Tokyo's Nikkei up more than 2 percent, after talk of a bailout plan for a U.S. bond insurer Ambac eased worries about the outlook of global credit markets. Another boost came from a report in Britain's Times newspaper that China's sovereign wealth fund planned to buy as much as $10 billion in Japanese stocks and may consider purchasing a large stake in oil and gas developer Inpex Holdings China's Stock Index Falls to Three-W...