Indian Rupee May Gain to 39 This Year as Intervention Will Fail, HSBC Says

(Bloomberg) -- India's rupee may strengthen to 39 by
the end of the year, the strongest since February 1998, because
the central bank will fail in its efforts to stem both currency
gains and inflation, HSBC Holdings Plc said.

The Reserve Bank of India is selling rupees so fast that it
can't mop up the cash injected into the economy, causing
overnight interest rates to fall to near zero, Robert Prior-
Wandesforde, a Singapore-based economist, and Pieter Van Der
Schaft, a Hong Kong-based strategist, wrote in a research note.
That rate is too low for an economy growing at 9 percent a year,
they wrote.


Read more at Bloomberg Currencies News

Philippine Inflation Probably Stayed Close to Seven-Year Low on Currency

(Bloomberg) -- Philippine inflation probably rose in
July. Still, the pace was close to the slowest in 7 1/2 years as
gains in the peso against the dollar lowered the price of
imports, including oil.

Consumer prices increased 2.4 percent from a year earlier,
according to the median estimate of 14 economists surveyed by
Bloomberg News. Inflation was 2.3 percent in June after rising
in the previous two months from 2.2 percent, the lowest level
since January 2000. The National Statistics Office report is due
tomorrow at 9 a.m. in Manila.


Read more at Bloomberg Currencies News

Indian Rupee Gains Most in Month; Central Bank Raises Reserve Requirement

(Bloomberg) -- India's rupee gained the most in a
month as the central bank announced measures to reduce funds in
the banking system to curb inflation.

The Reserve Bank of India raised the amount of cash lenders
must set aside to cover deposits by half a percentage point to 7
percent, reducing the supply of rupees and adding to pressure
for appreciation. It also scrapped the 30 billion rupees ($742
million) daily limit on the amount of money it drains through
bond sales at reverse-repurchase auctions.


Read more at Bloomberg Currencies News

TREASURIES-Steady in Asia ahead of core PCE

(Reuters) - Later this session, investors will focus on the release of
the Federal Reserve's favoured inflation measure -- the "core"
personal consumption expenditures price index -- to gain
hints on the chances of a Fed rate cut later this year.




Concerns about fallout from the market turmoil has helped
reignite talk of a Federal Reserve rate cut from the current 5.25
percent, with the futures market now factoring in a 70 percent
chance of a quarter-point rate cut by year-end.


Read more at Reuters.com Bonds News

Sri Lanka's Inflation Probably Accelerated in July on Oil and Food Prices

(Bloomberg) -- Sri Lanka's inflation probably
quickened in July for the first time in four months as higher
oil and food prices offset slowing loan growth.

Consumer prices in the capital Colombo rose 15.5 percent
from a year ago, after gaining 13 percent in June, according to
the median forecast of 12 analysts in a Bloomberg survey. The
statistics department's index, the key inflation gauge watched
by the central bank, is due tomorrow at 3 p.m. in Colombo.


Read more at Bloomberg Emerging Markets News

TIPS, A Bad Tip on Inflation in 2006, Lose Value as Oil Closes In on $100

(Bloomberg) -- Treasury investors say inflation is
abating, even if the oil bulls are right and crude heads to $100
a barrel.

Pacific Investment Management Co. and Fidelity Investments
sold Treasury inflation-protected securities maturing next year,
confident that consumer prices will remain in check. Money
managers lost as much as $275 million on so-called TIPS in the
second half of 2006 because oil fell from record highs and
gasoline prices dropped.


Read more at Bloomberg Bonds News

European Bond Yields Hold Near Lowest in Two Months as Stocks Decline

(Bloomberg) -- European bond yields held near the
lowest in two months as stock markets across the region fell and
corporate-debt risk surged to a record

Bunds reversed earlier losses on speculation investors
switched to the safety of government securities. Benchmark 10-
year yields rose earlier after data showing consumer-price
inflation accelerated in Germany in July, adding to the case for
the European Central Bank to keep raising interest rates.


Read more at Bloomberg Bonds News

S.Africa June PPI slows to 10.4 pct yr/yr

(Reuters) - South Africa's producer price inflation braked to 10.4 percent year-on-year in June, bang in line with forecasts, after an 11.3 percent increase in May, official data showed on Thursday.

On a monthly basis, PPI increased by 2.1 percent after a 1.1 percent rise in May.


Read more at Reuters Africa

Czech Central Bank May Increase Interest Rate to the Highest In Five Years

(Bloomberg) -- The Czech central bank probably will
raise its benchmark interest rate by a quarter-point to the
highest in almost five years to curb accelerating inflation, a
survey of economists shows.

The bank's seven-member board will lift the 14-day repurchase
rate, now the lowest in the European Union, to 3 percent today in
the second increase this year, according to 21 of 23 economists in
a Bloomberg survey. Two forecast no change. The Prague-based
central bank typically announces its decision around noon.


Read more at Bloomberg Currencies News

New Zealand Dollar Falls as Bollard Signals Rate Increase May Be the Last

(Bloomberg) -- New Zealand's dollar fell and bonds
rose after central bank Governor Alan Bollard signaled today's
interest-rate increase may be the last.

The currency declined against 16 of the most-active
currencies as Bollard said the four quarter-percentage point
moves in rates this year to a record 8.25 percent should be
enough to contain inflation. He said the 28 percent rally in New
Zealand's dollar against its U.S. counterpart in the past 12
months is ``not sustainable.''


Read more at Bloomberg Currencies News

Australia Dollar Holds Near 18-Year High on August Interest-Rate Rise Bets

(Bloomberg) -- The Australian dollar traded close
to an 18-year high on bets the central bank will raise the
interest rate next month, making the country's bond yields more
attractive for overseas investors.

The local dollar has gained against all 16 most-active
currencies this month as the odds of the Reserve Bank of
Australia raising rates a quarter-point on Aug. 8 climbed to 79
percent from 5 percent at the end of June, according to a Credit
Suisse Group index based on the exchange of interest-rate swaps.
Traders added to bets after a report yesterday showed inflation
was faster than expected in the second quarter.


Read more at Bloomberg Currencies News

U.S. Benchmark Treasury Yield Holds Below 5 Percent on Mortgage Concerns

(Bloomberg) -- U.S. 10-year Treasury yields held
near the lowest in two months as investors sought the relative
safety of government debt on concern that losses on subprime
loans in the U.S. will hurt the broader economy.

Benchmark yields stayed below 5 percent for a second day
before a report this week that's expected to show home sales
fell to the lowest in four years in June. Federal Reserve
Chairman Ben S. Bernanke last week said inflation will recede
and housing market weakness may slow the economy.


Read more at Bloomberg Bonds News

European Bond Yields at Seven-Week Low as Subprime Concern Hurts Stocks

(Bloomberg) -- European 10-year bond yields were at
the lowest in seven weeks as stocks declined in Europe, Asia and
the U.S., underpinning demand for the safest assets.

The yield on the benchmark 10-year bund fell to the lowest
since May on concern defaults on U.S. subprime mortgages will
spread to the wider economy. European and Asian stocks dropped
today after declines in the U.S. on Friday as Federal Reserve
Chairman Ben S. Bernanke said inflation will recede and housing
market weakness may slow economic expansion.


Read more at Bloomberg Bonds News

TREASURIES-Bonds steady on Bernanke's balanced view

(Reuters) - NEW YORK, July 19 - U.S. government debt prices
finished steady on Thursday, caught between warnings from
Federal Reserve Chairman Ben Bernanke about inflation and
threats to growth from a weak housing market.




Sharp gains in stocks, driven by upbeat earnings news that
pushed the Dow Jones industrial average to an unofficial close
over 14,000 for the first time, also kept a lid on bond prices,
analysts said.


Read more at Reuters.com Bonds News

TREASURIES-Bonds flat on Bernanke's balanced economic view

(Reuters) - NEW YORK, July 19 - U.S. government debt prices
were flat on Thursday, caught between warnings from Federal
Reserve Chairman Ben Bernanke about inflation and threats to
growth from a weak housing market.




Sharp gains in stocks, driven by upbeat earnings news, also
kept a lid on bond prices, analysts said.


Read more at Reuters.com Bonds News

TREASURIES-Bond stable as Bernanke balanced

(Reuters) - NEW YORK, July 19 - U.S. Treasuries coasted
sideways on Thursday as Federal Reserve Chairman Ben Bernanke
balanced concerns on housing with warnings on inflation.




Bonds recovered losses after the central bank chief argued
there would be substantial financial losses associated with
risky home loans, known as subprime.


Read more at Reuters.com Bonds News

No changes to U.S. 30-year mortgages this week

(Reuters) - "In a week marked by stock indexes reaching new highs on
Wall Street, mortgage rates lingered near the previous week's
level as the latest economic indicators did not affect
inflation expectations significantly," said Frank Nothaft,
Freddie Mac vice president and chief economist.




He also said the mortgage giant does not believe the
tumbling housing market has yet reached a "trough," with the
Commerce Department reporting this week that building permits
fell by 7.5 percent in June to the lowest level in 10 years.


Read more at Reuters.com Bonds News

Bernanke Prepares Ground for Longest Interest-Rate Freeze in Two Decades

(Bloomberg) -- Federal Reserve Chairman Ben S.
Bernanke is preparing the ground for the longest freeze in
interest rates in two decades.

Bernanke, delivering his semiannual economic testimony to
Congress yesterday, presented trimmed forecasts for growth this
year and next because of the prolonged housing recession. At the
same time, he said the ``predominant'' concern is that inflation
won't recede as forecast.


Read more at Bloomberg Bonds News

Premier Erdogan's Election May Boost Turkey Shares, Cheaper Than Europe's

(Bloomberg) -- Turkish stocks, cheaper than equities
in the markets of the European Union, are attracting investors
who say this year's rally is just the beginning.

Prime Minister Recep Tayyip Erdogan, who has sold state
industries and reduced the budget deficit, will retain power in
this weekend's elections, according to six opinion polls. The
mostly Muslim nation of 72 million has had 21 straight quarters
of economic growth and inflation is near a five-year low.


Read more at Bloomberg Emerging Markets News

Treasuries Little Changed as Bernanke Says Economic Growth Will Pick Up

(Bloomberg) -- Treasuries were little changed as
Federal Reserve Chairman Ben S. Bernanke predicted U.S. economic
growth will pick up slightly next year and inflation will
gradually recede.

The yield on the benchmark 10-year note rose almost 1 basis
point, or 0.01 percentage point, to 5.05 percent at 10:05 a.m.
in New York, according to bond broker Cantor Fitzgerald LP. The
price of the 4 1/2 percent note due in May 2017 fell 2/32, or 63
cents per $1,000 face amount, to 95 3/4. Bond yields and prices
move in the opposite direction.


Read more at Bloomberg Bonds News