LONDON, ENGLAND, Jan 24, 2012 (MARKETWIRE via COMTEX) –
Building on a growing online readership, World Finance has unveiled
a redesign to the magazine’s website, at
www.worldfinance.com .

Utilising the creative talents of World News Media’s digital arm
(found at
www.wnmedia.com ), the new website contains many new
features, and presents a user-friendly interface to allow
straightforward navigation of one of the most widely-recognised and
respected financial publications available.

Offering industry and expert comment pieces, market reports, and a
vast collection of insights across a variety of economies, the new
site lives up to the magazine’s reputation for excellence.

Further, the magazine’s television site has been refreshed, with all
videos on
www.worldfinance.tv now available to stream and watch on
iPhone, iPad, and Android devices.

Commenting on the new site, Alexander Redcliffe noted, “This is a
very important time in the history of economic and financial
reporting, and I’m excited to be opening another chapter in World
Finance’s rich history.

“As well as offering our readership an industry-defining mobile
outlet, the website reflects our determination to continue to inspire
those interested in the very best in business and economic
commentary.

“With our dedicated iPad application in the early stages of
production, 2012 promises to be a very exciting time for the World
Finance readership.”

World News Media is a leading publisher of quality financial and
business magazines, enjoying a global distribution network that
includes subscriber lists of the most prominent and senior
decision-makers around the world, as well as comprehensive airport,
hotel and conference site distribution.

Contacts:
World Finance
Michael McCaw
Editorial Department
+44 (0)20 7553 4156
michael@worldfinance.com

SOURCE: World Finance

mailto:michael@worldfinance.com

Copyright 2012 Marketwire, Inc., All rights reserved.

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By Mayumi Otsuma

Jan. 25 (Bloomberg) — Japan’s Finance Ministry lowered its evaluation of the country’s regional economies for the first time in nine months as the yen’s advance to a postwar high against the dollar weighed on growth.

The economies “are in a severe state, though they are improving at a moderate pace,” the ministry said in a quarterly report released today in Tokyo. It downgraded its assessment for five of 11 areas it tracks including Tokai, home of Toyota Motor Corp. It maintained its view in five and became more optimistic in its evaluation of Okinawa, the nation’s southernmost island.

The yen’s appreciation has been one factor in causing regional economies to slow to a “standstill,” Finance Minister Jun Azumi said at the meeting of the ministry’s regional bureau chiefs in Tokyo today. Japan’s currency rose to a postwar high of 75.35 in October, an appreciation that, coupled with weaker demand, caused Japan to post its first annual trade deficit in 31 years in 2011.

As for the outlook, the ministry said foreign exchange rates and overseas economies may threaten regional economies.

–Editors: Lily Nonomiya, Iain Wilson

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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READER DISCUSSION

ANALYSIS:As Ireland gets set for its next four budgets, events in Greece and elsewhere take their toll

INTEREST RATES down. Unemployment up. Turmoil in markets. Madness in Athens. Confusion in Cannes. Farce in Rome. And today the Government will set out the size and composition of the next four budget adjustments.

Even by the standards of the never-ending two-year euro crisis, yesterday was exceptional. The acceleration in the pace of events in our Continent seems to be without end.

Start in Frankfurt. Mario Draghi took over as president of the European Central Bank on Tuesday. Yesterday, before he had warmed the presidents seat, he and his 22 colleagues cut interest rates. It was a bold and unexpected move. Although the bank has been proved wrong in its decision to raise rates twice earlier this year, yesterdays decision makes some amends.

Just as importantly, it gives reassurance that the Italian will not try to be more German than the Germans themselves on keeping prices stable. There were (and still are) real concerns that a central banker from a country with an awful inflation record would feel compelled to be ultra-hawkish when setting interest rates. With inflation in the euro zone at 3 per cent well above the just-below-2-per-cent target the bank is mandated to meet cutting rates was brave.

And from what was said at his first press conference yesterday, Draghi wont stop at that. He looks like giving those servicing debt an early Christmas present when he delivers another cut in December. Given Irelands weak economy and its lowest-in-Europe inflation, super-low interest rates are just what the doctor ordered. Bravo, Mario.

Yesterday also saw the publication of Octobers unemployment rate and welfare claimant count. Both were up on September, but only by a smidgen. What is remarkable about the jobless rate apart from the human misery it points to is how steady it has been since September of last year. Over the past 13 months, it has trended neither up nor down. That it is not rising is a positive, given how much upheaval has been experienced over that period. But it remains one of the highest rates in the developed world and its failure to fall means that the years-long process of returning to full employment has not even started.

Minister of Finance Michael Noonan would no doubt chose to stress the more positive interpretation of yesterdays jobless figures. Yesterday, in a speech to the Institution of International and European Affairs, he urged everyone to be cheerier. If we were all more confident, the economy could be in a very good place very quickly, he said.

He overstates his case a lot. While confidence is important, all the positivity in the world will not shrink households huge debt, lessen the need for painful budgetary adjustments or fix broken banks.

Despite his upbeat message, Noonan let it be known that he would cut the Governments forecast for economic growth next year. The downgrading of the official forecast was, he said, a result of a gloomier international outlook.

New official forecasts, and much else besides, are to be published this afternoon in the Department of Finances pre-budget report. It is the first piece in the budgetary jigsaw, and in many ways it will be the most important. It will definitively answer the question of how big next years adjustment is to be (anything outside the 3.6-4 billion range would be a surprise) and signal the size of adjustments in each subsequent year to 2015.

It will also answer the question that has long divided the Coalition partners how much of the adjustments should be accounted for by spending cuts and how much by new taxes?

A well-argued report, based on realistic targets and informed by the comprehensive spending review conducted over the summer will boost the Governments credibility and help in the States long haul back to creditworthiness.

If Noonan and his colleagues have built some credibility since taking office, Greeces George Papandreou and his ministers long ago lost theirs. Papandreous personal decision to call a referendum on Sunday night turned whatever sympathy his counterparts had for him into contempt.

If his gross recklessness ends in his departure and the coming to power of a national unity government, it will be the best of all possible outcomes for that country as it faces a full-scale national emergency, although the prospect of that receded last night after his U-turn on holding a plebiscite.

But no matter what happens in domestic Greek politics, Papandreous hare-brained stunt has edged the euro still closer to break-up.

The response of other EU leaders to the referendum threat was, for the first time, to contemplate publicly a member country departing the single currency bloc. Though understandable given the intensity of frustration with the Greek administration, threatening to boot a country out of the euro was a huge mistake.

EU leaders have repeatedly and steadfastly stated that leaving was unthinkable and legally impossible. They should know by now that rowing back on solemn commitments ends up weakening them collectively. They may well rue their overreaction to the Greek prime ministers provocation.

But if the eyes of the world have been on Papandreous moment of madness, the biggest problem is Greeces nearest euro neighbour, Italy. Following one day of calm after last weeks latest plan to save the euro was unveiled in Brussels, Italian government bond yields soared. This week they have been well above previous euro-era peaks, reached when the euro crisis entered end-game territory in July.

The Italian state needs to raise 300 billion between now and the end of next year. It is touch and go as to whether it will be able to do that.

Despite this frightening risk, the Italian government continues to fiddle with a reform package that, if announced and swiftly implemented, could demonstrate an intent and capacity to avert disaster.

The most direct and immediate consequence of all this turmoil for Ireland was the decision of the EUs bailout fund the European Financial Stabilisation Facility to postpone its bond auction on Wednesday. The money raised was to be used to fund Irelands next tranche of bailout cash.

The retreat from the market is a very worrying development, and not just for Ireland. The EFSF is built on shaky foundations because its creditworthiness is so closely linked to that of France.

As concerns about Frances fiscal capacity have grown, so too have concerns about the EFSF. Since the euro crisis moved into end-game in July, EFSF five-year bond yields have gone from 50 basis points above those of Germany to more than 150 basis points.

If it comes to it, who will bail out the bailout fund?

Only the ECB stands between the euro and oblivion if the EFSF ends up being unable to raise cheap cash.

Mario Draghi is the third ECB president. Increasingly, it appears as if his actions will determine whether he will be its last.

The French president, Nicolas Sarkozy, has been urging the Chinese to agree to contribute to his proposed EUR1tn (£864bn) European Financial Stability Facility (EFSF) firewall.

Speaking before the summit, the Chinese vice finance minister, Zhu Guan, said: There are no concrete plans yet, so its too early to talk about further investments in these tools.

Zhu said the rescue fund, already part of Chinas portfolio, was an important tool with which to address the sovereign debt crisis.

EU leaders have agreed to boost the EUR440bn funds firepower to EUR1tn as part of a broader crisis-fighting package that aims to shore up banks and provide new aid to Greece.

Sarkozy, desperate to show concrete results from the summit, may try to produce agreement that the size of the IMF fund is also increased to help bail out ailing European economies as a short-term alternative.

Innate Chinese caution has been increased by the sense of chaos inside the eurozone – and within Greece in particular – on whether the bailout plan agreed at the EU summit a week ago is going to hold together.

Eager to find something to show the markets that political leaders are on top of the crisis, the G20 leaders will be desperate to point to progress being made on aspects of the package.

The search for Chinese funds is being complicated by Chinas reluctance to include language in the final communique criticising any aspect of Chinese trade surpluses or exchange rates.

A draft of the communique, leaked over the past few days, calls on China to allow more flexibility in its currency to help ease global trade and investment.

Pressure on China to intervene on its renminbi currency has been a consistent feature of G20 and G8 summits over the past few years. The US argues that an intentionally undervalued renminbi unfairly supports Chinese exports.

With $3.2tn (£2tn) in foreign exchange reserves – roughly a quarter of which are believed to be held in euros – China is being asked to contribute between $50bn and $100bn to the EFSF or a new special purposes vehicle fund set up under its auspices in collaboration with the IMF.

The draft text, written before it became clear that Europe would need Chinese help to save the euro, said emerging markets with trade surpluses should continue to move towards more market-determined exchange rate systems and achieve greater exchange rate flexibility to reflect economic fundamentals.

The US treasury secretary, Tim Geithner, said last year that the Chinese currency had appreciated 10%, adjusted for inflation, from mid-2010 through early October – a pace that was too slow.

Sarkozy, as the head of the G20 this year, has advocated an increased international role for the Chinese currency, bringing it into the IMFs special drawing rights system, a form of reserve currency on which countries can draw to help their programmes.

Greek Prime Minister George Papandreou earlier said he was open to scrapping the referendum if the opposition backed the bailout package, but has not ruled out the plan altogether.

Venizelos had initially backed the referendum but later broke ranks with his prime minister, arguing that it was not what Greece needed at this time.

In a speech to fellow Socialist lawmakers on Thursday, Venizelos said the bailout ought to be approved by an increased majority of 180 lawmakers in the 300-seat parliament. He said the debt-choked country needed its sixth tranche of aid from foreign lenders before December 15.

(Reporting by Harry Papachristou)

On Election Day, he would provide whats known as ballot security — paying poll watchers to ensure voter fraud or mistakes dont occur — for about $1.1 million.

Bloomberg accepted, and days before the election, his aides transferred $1.2 million from his personal fortune to the state Independence Party, which had endorsed his candidacy. Bloomberg intended the party to keep $100,000, and the rest to go to the operative, John Haggerty.

But Haggerty never hired any poll workers, Manhattan prosecutors say. Instead, he took $750,000 the party sent him in December 2009 and used most of it to pay for a house. He directed the party to keep the remaining $450,000.

This story, told in court filings, forms the basis of the grand larceny charge against Haggerty, whose trial is expected to start Monday in state court in New York. But it has also raised questions about whether Bloombergs political donations violated New York election law.

Bloombergs office has denied any impropriety, saying the contributions were in accordance with campaign-finance law.

As a general matter, the mayors team sought and received legal advice when making contributions, and this contribution was perfectly legal and appropriate, Howard Wolfson, a deputy mayor and one of Bloombergs chief advisers, said in an email.

Neither Bloomberg nor the Independence Party have been charged with any violations of election law.

HOUSEKEEPING

The key question is whether Bloombergs money can be considered a campaign expenditure intended to help him get re-elected, or a donation to the party to aid all of its candidates.

Two laws govern city campaign funding: the state election law and the New York City Campaign Finance Act. Both laws require that candidates report all expenditures intended to help a campaign.

The state law does not require donors to report what they give to party housekeeping accounts, but these accounts are restricted to paying for maintaining a headquarters and staff and other ordinary activities which are not for the express purpose of promoting the candidacy of specific candidates.

Bloomberg, who spent more than $100 million of his own money on the 2009 campaign, did not report the $1.2 million to the state election board.

Henry Berger, an election lawyer, said he believes Bloombergs failure to report the donation represents a campaign-finance violation.

If he gave them money to be used in connection with his campaign, he violated his obligation to the state board of elections, Berger said.

But Wolfson said Haggertys proposal was intended to help multiple candidates, not just the mayor.

Our expectation was that the Election Day operation would benefit all candidates running on the Independence Party line, he said.

Berger called that a distinction without a difference.

I think thats a campaign expense, he said. I think Election Day expenses in their entirety are campaign-related.

POROUS STATUTE

Whether Bloombergs contribution was legal is complicated by the absence of a judicial ruling that governs the interpretation of the laws language, said Jerry Goldfeder, an election lawyer who has worked for many Democratic campaigns, including those of several of Bloombergs mayoral opponents.

The election law in New York is written in an ill-defined, ambiguous way, Goldfeder said, adding that he did not believe any laws were broken. Its one of the more porous statutes that we have. But if the Independence Party spent money on ballot security, it is within the normal range of how housekeeping accounts spend monies.

Both the New York City Campaign Finance Board and the state board of elections have the power to investigate potential violations, though enforcement on the city level is generally more rigorous, experts say.

The campaign finance board can fine offenders as much as $10,000 for a deliberate infraction, while state law includes potential civil and criminal penalties for violators. Both bodies can refer cases to law enforcement, though that is rare.

The city board conducts audits of all citywide candidates following elections, and the audit of Bloombergs 2009 campaign is not complete.

Eric Friedman, a board spokesman, said, While we dont discuss the substance of audits that are ongoing, part of every audit that we do is to ensure that the reporting to the public is complete and accurate.

UNCOMFORTABLE QUESTIONS

Even if he did not violate any election laws, Bloomberg could face some uncomfortable questioning if he testifies at Haggertys trial, which remains a possibility.

Haggertys lawyers have indicated in court documents that they will ask the mayor and his aides about the practice of using third-party accounts to pay for vendors, and will argue that Bloomberg deliberately hid Haggertys hiring rather than simply paying him directly.

Obviously, Bloomberg did not want this money to be known, Muzzio said. Otherwise, they would have done it through the campaign. The inside-baseball folks are beginning to say, What does the mayor have to hide?

When asked why Bloomberg didnt hire Haggerty directly through the campaign, Wolfson said in an email that it was because election day operations are traditionally the purview of parties.

The case is People v. Haggerty, New York State Supreme Court, New York County, No. 2598/2010.

(Reporting by Joseph Ax; Editing by Jesse Wegman)

Slow learners at UBS

ONE OF the most startling things about the arrest of UBS trader Kweku Adoboli (31) in connection with a $2 billion fraud, is how little has changed three years after the sub-prime crisis that brought global banks, including UBS, to their knees.

Adoboli operated in the Swiss Banks Delta One business, a shadowy area of banking which has also been identified as a major engine of growth for investment banks. As one commentator noted most bank chief executives dont understand how these units work and UBSs admission that it doesnt know where the rogue trades were made, and it may be some time before it can do so, seems to confirm that assertion.

Delta One products are derivatives that are designed so that for a given percentage move in the price of the underlying assets there will be an almost identical move in the price of the derivative. In finance speak they have a delta of one.

Much of the activity revolves around Exchange Traded Funds (ETF), which are vehicles that allow investors track a diverse group of assets without the downside of paying high fees. Because the ETFs are quoted on stock exchanges, Dublin has become a major centre for them, it seems like they are a pretty safe bet. But increasingly ETFs contain a much more exotic mix of derivatives rather than the plain vanilla mix of commodities and cash equities that they started out as.

Blurring things even more, the investment banks are not entirely open about how they manage, hedge and rebalance these funds. As a result they blur the lines between proprietary and client trading.

All of which is horribly familiar from the days of the synthetic collateralized debt obligations, made up of dodgy US home loans, which blew up so spectacularly in 2008.

UBS lost 50 billion in the sub-prime fiasco, which forced it to accept a bailout from the Swiss government. Clearly the top brass havent learned their lesson.

Trapped by a tracker mortgage

WITH ALL the talk of mortgage debt forgiveness, the problem of restoring the property market to a functioning state has taken a back seat. And it is easy to see why this is the case: the situation faced by those burdened with unrealistic housing debt is considerably more nightmarish and urgent than that of people who quite fancy a bit more space or even those who want to get on the ladder for the first time. But to discount these latter two groups would be mistaken with both needed in a healthy market.

The issue of poor or even non-availability of mortgages will be familiar to anybody who has entertained the notion of borrowing lately. And even when a loan is proffered, the interest rate may be enough to scare off the would-be borrower, who is probably used (in the case of a trader-upper) to the security delivered by an existing tracker mortgage.

This represents the nub of the problem how can those holding such mortgages (which are no longer available) be persuaded to give them up so that they can move house, thus vacating properties for first-timers?

The issue requires a creative response, both from the banks and the Government.

From the lenders perspective, its a particular toughie, because trackers mean losses, rather than profits, so it makes sense to get rid of as many as possible from their books. This is no mean feat, given some lenders see two-thirds of their total mortgage exposure tied up in such products.

Perhaps the approach should not be one of eliminating trackers, but rather about tolerating them with a view to winning more lucrative business from an existing customer base. This could see, for example, a trader-upper, being allowed to move their tracker with them when they buy a new property (to a point at least) but being required to finance the additional expense attached to the purchase via a new mortgage product. Any subsequent early or over-payments would then be taken off the tracker, rather than the newer portion of the loan. This way, the lender would make some money out of the deal, while the buyer wouldnt feel like the risk is quite so large.

Meddling in the market is of course aways potentially problematic, but this may be justified, if managed properly.

You can get the latest news each business day at irishtimes.com/business or by following us on Twitter at twitter.com/IrishTimesBiz. We also have a Facebook page at facebook.com/IrishTimesBiz where you can read the latest business headlines, blog posts and reader polls.

* Fannie Mae, Freddie Mac drawn $170 bln in taxpayer funds

* Many Republicans want to end federal backstop in housing

* Conforming loan limits on govt mortgages expire Oct. 1

By Margaret Chadbourn

WASHINGTON, Sept 13 (Reuters) - Top Senate lawmakers on
Tuesday laid bare long-standing differences on how to wind down
government-sponsored mortgage enterprises Fannie Mae (FNMA.OB)
and Freddie Mac (FMCC.OB), underscoring the difficulty Congress
will face in revamping the US housing finance system.

Democrats and Republicans alike agree both entities should
be wound down but whether the government should still have a
role subsidizing housing finance is still unsettled.

I am concerned about the unintended consequences for our
housing market and economy that could result if a government
role is eliminated completely, Senate Banking Committee
Chairman Tim Johnson, a South Dakota Democrat, said during the
panels tenth hearing on housing finance reform.

He said that record low mortgage rates, which currently
hover around 4 percent, would likely jump across the country if
the government backstop is diminished.

Fannie Mae and Freddie Mac, the two congressionally
chartered mortgage behemoths seized by the government in 2008
as losses on subprime loans mounted, are critical to the
housing market. They provide financing to banks and lenders by
purchasing mortgages and either keeping them on their books or
packaging them for sale to investors.

The firms have already soaked up $170 billion in taxpayer
dollars since they were placed under government control.

We need a private system to enable institutional
investors, Peter Wallison, a fellow with the conservative
American Enterprise Institute, told the panel. We are forcing
the taxpayers to take the risk the government is taking.

Senator Richard Shelby, the top Republican member on the
committee, said there needs to be a political will to end the
government backstop in the mortgage market and limit taxpayer
losses. He said the histories of Fannie Mae and Freddie Mac
play out like a horror movie.

Federal guarantees were often viewed as ways to subsidize
homeownership, he said. It is clear the old way of doing
things failed on a massive scale.

Any legislation to lessen the governments footprint in
housing finance has to get through both a Democrat-controlled
Senate and Republican-led House of Representatives. It is
likely to be a multi-year effort to complete reforms.

Republicans in the House have proposed legislation and
alternative housing finance systems, but none have reached the
House floor for a vote.

The first test of how difficult it might be to wean the
housing market off government support will come at the end of
the month when the so-called conforming loan limit drops back
to pre-financial crisis levels.

The loan limit puts a cap on the size of mortgages that the
Federal Housing Administration, Fannie Mae and Freddie Mac can
guarantee. They are set to fall from $729,500 to $625,500 on
Oct. 1 in the highest-priced real estate markets.

Three years after taking control of Fannie Mae and Freddie
Mac, the government now backs nearly nine in 10 new mortgages.
(Editing by James Dalgleish)

TOM HUDSON: Uncle Sam is taking on the nation`s biggest bankers over securities
backed by bad mortgages. The Federal Housing and Finance Agency which
oversees mortgage buyers Fannie Mae and Freddie Mac sued 17 banks late
today. Among those banks targeted, Bank of America (NYSE: BAC), Citigroup
(NYSE: C), JPMorgan Chase (NYSE: JPM) and Goldman Sachs. Joining us now is
our Washington bureau chief Darren Gersh and he joins us from our
Washington bureau. Darren, what is this central allegation here that the
Federal agency is making against these big banks?

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well Tom, it`s
very interesting. Basically the Federal regulator that`s suing these banks
as an investor and they`re saying the banks when they (INAUDIBLE) go with
these complicated mortgage-backed securities basically they didn`t follow
underwriting procedures and essentially lied to investors about the ability
of these borrowers to repay their loans. Very interesting detail in here is
that some of these suits allege that the banks hired due diligence firms to
make sure that these loans were OK and then ignored their advice. If
that`s true, that`s very damaging.

HUDSON: Very damaging. It`s not the first time the banks have been
alleged to have behaved improperly when it came to handing out these
mortgages. But I want to ask first about any possible remedies here as they
try to negotiate a settlement, perhaps.

GERSH: You know Tom, when I was adding up the amount of money
involved and how much the Federal regulators want back, I thought my
calculator was going to catch on fire. They`re asking for $188 billion.
Then they want some damages, which would be hard to get. One very important
thing — the Federal regulators, the Federal Housing Finance
Administration, has hired plaintiffs` lawyers. These are private firms,
very skilled in security lawsuits, very aggressive. They`re serious.

HUDSON: This comes at a time when the Obama administration is likely
to try to put more pressure on banks to ease some of those underwater
mortgages. We may hear more of that on Thursday with the president`s
speech. Darren, we appreciate the insights into this big lawsuit here
announced late today, from Washington this evening, our bureau chief, is
Darren Gersh.

GERSH: Thank you.

Yields on 10-year notes pared their biggest weekly increase
since July a day after the European Central Bank took steps to
maintain liquidity for financial institutions. Treasury
Secretary Timothy F. Geithner said at a conference of European
finance ministers in Poland today that leaders need to work
together to avoid setting off a “protracted” slump.

“People are coming back into the long bond and buying,”
said Michael Franzese, managing director and head of Treasury
trading at Wunderlich Securities Inc. in New York. “It’s a
definite flight to quality. Everybody thought the crisis was
ring-fenced.”

Yields on the 10-year notes slid three basis points, or
0.03 percentage point, to 2.05 percent at 5:16 pm in New York,
according to Bloomberg Bond Trader prices. The 2.125 percent
securities maturing in August 2021 gained 10/32, or $3.13 per
$1,000 face amount, to 100 22/32.

The 10-year note yields posted a weekly increase of 13
basis points, the biggest gain since the five days ended July 1.
The yields fell four days ago to 1.8770 percent, the record low.
Yields on 30-year bonds rose seven basis points on the week to
3.31 percent.

Finance Ministers

European finance ministers rejected efforts to prop up the
faltering economy and gave no indication of providing aid for
lenders to go along with yesterday’s ECB liquidity lifeline.

Ten-year note yields rose yesterday the most in three weeks
as the ECB said it will work with the Federal Reserve and other
central banks to lend euro-area financial institutions dollars.

“Yields have bounced back this week from Lehman-scenario
levels because of some good news earlier in the week, but it
remains to be seen if this improvement in sentiment will last
given there’re still a lot of uncertainties,” said Michael Leister, a fixed-income strategist at WestLB AG in London.

Geithner said at the conference in Wroclaw, Poland, that
Europe must “choose” to solve its debt crisis so its fate
doesn’t rest with financial markets or the nations that back the
International Monetary Fund. He flew from Washington for the day
to meet with EU finance ministers and central bankers in his
first-ever appearance at one of their scheduled meetings.

US Bond Rally

US debt securities have rallied in 2011 as speculation
Europe’s sovereign-debt crisis will cripple the region’s
financial institutions and evidence of a stalled American
economic recovery spurred demand for the safest assets.

The government auctioned $32 billion of three-year notes,
$21 billion of 10-year debt and $13 billion of 30-year bonds at
record low yields this week.

Treasuries have returned 7.8 percent in 2011 in what would
be their best year since the depths of the financial crisis in
2008, according to Bank of America Merrill Lynch indexes. US
30-year bonds have returned 23 percent.

The Federal Open Market Committee may decide to replace
holdings of shorter-term Treasuries with longer maturities at
its two-day policy meeting starting Sept. 20 in an effort to
keep borrowing costs low and support the economy.

“We are in favor of taking a bet on the Fed and advise
investors to buy long,” said Guy LeBas, chief fixed-income
strategist at Janney Montgomery Scott LLC in Philadelphia,
referring to 30- and 10-year securities.

Consumer Confidence

The Thomson Reuters/University of Michigan index of
consumer sentiment increased this month to 57.8 after falling in
August to 55.7, the lowest level since November 2008, a report
showed today. The median estimate of 67 economists in a
Bloomberg News survey was for an advance to 57.

China, the largest foreign lender to the US, raised its
holdings of Treasuries by 0.7 percent in July to $1.17 trillion,
the most since October, according to Treasury Department figures
released today. It had $1.16 trillion of US notes and bonds, a
record high.

Xia Bin, an adviser to China’s central bank, was optimistic
in a July 25 telephone interview that President Barack Obama and
Republicans in Congress would overcome an impasse over raising
the statutory debt limit. Obama signed a bill raising the debt
limit on Aug. 2.

Japan, the second-largest overseas investor in Treasuries,
raised its holdings 0.4 percent to $914.8 billion, the most
ever, the data show.

Foreign holdings of Treasuries fell for a second month in
July to $4.48 trillion after rising to a record high $4.51
trillion in May. It was the first two-month decline in overseas
holdings since June and July of 2005.

To contact the reporter on this story:
Susanne Walker in New York at
swalker33@bloomberg.net

To contact the editor responsible for this story:
Dave Liedtka at dliedtka@bloomberg.net