Oil Rebounds From Seven-Week Low as Slump Is Viewed as Overdone

July 9 Crude oil rebounded from a seven-week low as traders took the view that the decline in prices during the longest losing streak this year was overdone.
Oil snapped a six-day slump as traders bought contracts based on technical indicators. Crude has fallen below $62.55 a barrel yesterday, the lower resistance level of the Bollinger Band, indicating it was oversold.
“In the short term, $60 may be the intraday support level, but in the longer term we have to go back to fundamentals, which are weak,” said Clarence Chu, an options trader at Hudson Capital Energy in Singapore.
Crude oil for August delivery gained as much as 85 cents, or 1.4 percent, to $60.99 a barrel on the New York Mercantile Exchange, and traded at $60.81 at 3:30 p.m. Singapore time. Futures touched $60.01 yesterday before closing down 4.4 percent at $60.14, the lowest settlement since May 19. Crude has fallen 15 percent since June 29.
Oil “got very close to $60 and probably attracted a bit of buying support around that level,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.
Crude also gained as the Washington-based International Monetary Fund said in a revised forecast yesterday that the world economy will expand 2.5 percent in 2010, compared with its April projection of 1.9 percent growth. A contraction this year will be 1.4 percent, worse than an April forecast for a 1.3 percent drop, the IMF said.
China’s passenger-vehicle sales rose 48 percent in June, the biggest jump since February 2006, as government stimulus spending spurred a revival in the world’s third-largest economy.
Gasoline Supplies
U.S. oil inventories dropped 2.9 million barrels to 347.3 million last week, the lowest since January, an Energy Department report showed yesterday. Refineries operated at 86.8 percent of capacity, down 0.2 percentage point from the previous week, the department said.
Gasoline stockpiles climbed 1.9 million barrels to 213.1 million in the week ended July 3, more than twice the increase forecast in a Bloomberg News survey, the Energy Department said. Motor fuel inventories were forecast to increase 900,000 barrels last week, according to the median of 16 responses in News survey.
Gasoline for August delivery rose as much as 2.47 cents, or 1.5 percent, to $1.6580 a gallon in New York. Yesterday, it declined 5.7 percent to settle at $1.6333, the lowest settlement since May 6 and the biggest one-day drop since March 30.
Inventories of distillate fuel, a category that includes heating oil and diesel, rose to the highest since 1985 as consumption dropped to a 10-year low.
Distillate Overhang
Distillate fuel inventories rose 3.74 million barrels to 158.7 million, the biggest gain since January, the report showed. The increase left supplies last week 30 percent higher than the five-year average for the period. Supplies were estimated to rise 1.83 million barrels.
“We may see further price drops, especially for distillates as we have an acute overhang in the U.S. and Europe,” Antoine Halff, head of energy research at Newedge USA LLC in New York, said in an interview.
Total U.S. daily fuel demand averaged 18.4 million barrels in the past four weeks, down 5.9 percent from a year earlier, the report showed. Distillate consumption fell 12 percent to 3.27 million over the period, the lowest since July 1999.
Brent crude for August settlement rose as much as 94 cents, 1.6 percent, to $61.37 a barrel on London’s ICE Futures Europe exchange and was at $61 at 3:06. p.m. in Singapore. Yesterday, it declined $2.80, or 4.4 percent, to $60.43, the lowest settlement since May 25.
Brent is trading at a 32 cent premium to crude oil offered in New York. The West Texas Intermediate contract traded on Nymex is typically priced higher than its European counterpart.

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India Wholesale Prices Fall for Fourth Straight Week

July 9 India’s wholesale prices fell for a fourth straight week, ahead of a government increase in fuel costs that may rekindle inflation pressures in coming months.
The benchmark wholesale-price index declined 1.55 percent in the week to June 27 from a year earlier after tumbling 1.30 percent in the previous week, the government said today. Prices plunged 1.61 percent in the first week of June, the biggest drop since December 1978, according to central bank data.
Declines won’t last for long after last week’s first increase in fuel prices in more than a year. The reemergence of inflationary pressures may prompt the central bank to start raising interest rates from a record low by early 2010, according to economist Indranil Sen Gupta.
“Rising inflation risks buttress our expectation of the Reserve Bank of India reversing its easy money policy by January-April 2010,” said Gupta, an economist at Bank of America-Merrill Lynch in Mumbai. “We continue to expect wholesale-price inflation to turn up after September.”
Other gauges of inflation, which India’s central bank also monitor when determining the direction of monetary policy, remain high.
Consumer prices paid by farm and rural workers jumped 10.21 percent in May from a year earlier and have averaged gains of more than 10 percent for the past 12 months. Consumer prices paid by industrial workers rose 8.63 percent in May from a year earlier, according to the latest government data.
Consumer Prices
India has four consumer price indices and uses the wholesale-price index as the benchmark as the other inflation measures don’t capture the aggregate price picture.
The difference between the wholesale and consumer-price indexes can be attributed to the weighting given to food items. Food accounts for as much as 70 percent of the consumer-price index, compared with just 27 percent of the wholesale-price index, according to the central bank.
“Such divergences in alternative inflation measures complicate the conduct of monetary policy in India,” central bank Governor Duvvuri Subbarao said on July 2. The Reserve Bank of India, which last cut borrowing costs on April 21, next meets to set interest rates in Mumbai on July 28.
The yield on the 6.07 percent note due May 2014 held at 6.34 percent as of 11:55 a.m. in Mumbai, unchanged from before the release of the inflation report, according to the central bank’s trading system.
No Deflation
The government is working on creating two new consumer price indexes for rural and urban areas, Finance Minister Pranab Mukherjee said July 3.
India is not in the grip of deflation as food-price inflation continues to be in double-digits, according to Governor Subbarao. The bank will review its 4 percent wholesale- price inflation target for the year to March 2010 when it meets later this month, he said.
Prime Minister Manmohan Singh’s government last week raised retail fuel costs for the first time in more than a year, making gasoline in the capital New Delhi 9.8 percent more expensive. Cooking gas and kerosene prices were left unchanged.
The index of fuel prices declined 12.42 percent from a year earlier in the week to June 27, following a similar fall in the previous week, today’s report showed. Prices of eggs, tea, corn, oilseeds, sugar, edible oils and fertilizers rose in the week.
Faster economic growth may also stoke inflation pressures in India and could force the central bank to start unwinding the interest-rate cuts commenced in October last year.
‘Bottoming Out’
India’s $1.2 trillion economy may expand as much as 7.75 percent in the year ending March 2010 amid signs of a “bottoming out” in the U.S. and harvests benefiting from monsoon rains, the Finance Ministry said July 2. Asia’s third- largest economy grew 6.7 percent in the previous 12 months.
Signs of economic recovery across Asia have prompted central banks in the region to stop cutting rates. The Bank of Korea kept its benchmark interest rate unchanged for a fifth month today on signs the economy is recovering from the worst global recession since the Great Depression. Australia’s central bank kept interest rates unchanged for a third month this week.
The International Monetary Fund said yesterday the global economic rebound next year will be stronger than it forecast in April as the financial system stabilizes, predicting the world economy will grow 2.5 percent in 2010.
India’s wholesale-price index published today may be revised in two months, after the government receives additional data. The commerce ministry today revised the rate for the week ended May 2 to 1.48 percent from 0.48 percent.

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Australian Employers Cut 21,400 Jobs as Exports Slow (Update3)

July 9 Australian employment fell in June, pushing the jobless rate to the highest in almost six years, as the global recession reduced demand for iron ore and coal exports and prompted mining companies to fire workers.
The number of people employed dropped 21,400 from May, the statistics bureau said in Sydney today. The median estimate of 21 economists surveyed by Bloomberg was for a decline of 20,000. The jobless rate rose to 5.8 percent from 5.7 percent.
Central bank Governor Glenn Stevens left borrowing costs at a half-century low of 3 percent this week for a third month to help stem firings at companies including BHP Billiton Ltd. Advertisements for job vacancies tumbled in June for a 14th month, a sign unemployment may rise in coming months.
“Full-time employment continues to fall so there is weakness there,” said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney. Still, the “rate of deterioration hasn’t increased as most people thought.”
The number of full-time jobs dropped 21,900 in June and part-time employment increased 400, today’s report showed.
The Australian dollar traded at 78.11 U.S. cents at 12:28 p.m. in Sydney from 78.04 cents before the report was released. The currency has jumped 8.5 percent in the past three months, making it the second-best performer against the U.S. dollar among the currencies of the major industrialized nations.
Consumer Confidence
Australia’s economy has so far skirted the worst global recession since the Great Depression. Gross domestic product rose 0.4 percent in the first quarter, making it one of the few major economies including China and India to expand.
Consumer confidence jumped to the highest level since December 2007 and home-loan approvals rose for an eighth month, reports showed yesterday.
“Leading indicators suggest we should be losing around 30,000 to 40,000 jobs per month, so the Reserve Bank would be happy with the recent performance of the labor market where trend losses are just 5,000 per month,” said Spiros Papadopoulos, an economist at National Australia Bank Ltd. in Melbourne.
To help boost employment and cushion the economy against slower global demand for natural resources, central bank policy makers slashed the overnight cash rate target by a record 4.25 percentage points to 3 percent between September and April.
Cash Handouts
Prime Minister Kevin Rudd’s government has also distributed A$12 billion ($9.4 billion) in cash handouts to households this year and is spending A$22 billion to upgrade roads, railways, hospitals and ports.
BHP Billiton, the world’s biggest mining company, is shedding 3,400 workers in Australia after shuttering a nickel mine in January and reducing coking coal output. Qantas Airways, the nation’s largest carrier, said in April that it will cut 1,750 jobs as demand for business and first-class travel wanes.
ANZ Bank said today it will scrap 248 jobs as it closes mortgage administration offices in cities including Sydney, Brisbane and Perth. The bank is Australia’s fourth largest.
“Weaker demand for labor is leading to lower growth in labor costs,” Reserve Bank Governor Glenn Stevens said on July 7. That gives policy makers “some scope for further easing of monetary policy, if needed,” he added.
Reports this month showed the construction industry shrank in June at a faster pace, exports slumped 5 percent in May from April and home-building approvals tumbled 12.5 percent, the biggest drop since November 2002.
Job Advertisements
Jobs advertisements dropped 6.7 percent last month from May and 51.4 percent from a year earlier, the largest annual decline since ANZ Bank began recording the figures in 1998.
Still, other reports suggest Australia’s economy will continue expanding this year. An index of consumer sentiment published yesterday by Westpac Banking Corp. climbed 23.2 percent in June and July, the largest two-month gain since the survey began in 1975.
The International Monetary Fund said the global economic rebound next year will be stronger than it forecast in April as the financial system stabilizes and the pace of contractions from the U.S. to Japan moderates.
The Washington-based lender said in a revised forecast released yesterday that the world economy will expand 2.5 percent in 2010, compared with its April projection of 1.9 percent growth.
Woolworths, Australia’s biggest retailer, has said it expects to add 7,000 workers and reaffirmed its forecast for an increase in annual profit of as much as 12 percent.
Rate Outlook
David Jones Ltd., Australia’s second-biggest department store chain, said last week that earnings after tax will rise by between 20 percent and 30 percent in the six months ending July 25. “The stimulus package has been good for confidence,” Chief Executive Officer Mark McInnes told reporters on June 30.
Investors expect Australia’s overnight cash rate target will be higher in 12 months, according to a Credit Suisse Group AG index based on swaps trading. Traders forecast the key interest rate will be 44 basis points higher in a year, the index showed at 12:22 p.m. in Sydney from 46 basis points just before the report was released and 48 basis points late yesterday.
The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.3 percent in June from a revised 65.4 percent, today’s report showed.

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BOE Should Seek Darling’s Consent to Print More Money,

july7

The Bank of England should ask the government for permission to start a further phase in its money- printing program because a recovery from the recession “is not guaranteed,” the British Chambers of Commerce said.
While Britain will return to growth in the final quarter, a recovery “is not yet secure,” the lobby group said in a report in London today. The central bank should extend its asset- purchase program to the full 150 billion pounds authorized by Chancellor of the Exchequer Alistair Darling and it should seek permission to spend even more, the BCC said.
Economists say the Bank of England may this week stick with its current plan to print 125 billion pounds ($202 billion) in new money as policy makers assess its effect in pulling Britain out of recession. The BCC’s survey of 5,600 companies showed today that manufacturing and services companies’ confidence improved in the three months through June.
“The worst of the recession is over, but the recovery is not guaranteed,” David Kern, the lobby group’s chief economic adviser, told reporters in London yesterday. “Policy is not yet effective and that has to change. They should go beyond 150 billion pounds.”
The Bank of England should print up to 200 billion pounds to spend in U.K. debt markets, Kern estimates. In a Bloomberg News survey of 36 economists, 20 said the bank will keep its current plan at the Monetary Policy Committee meeting on July 9, while the remainder said it will extend the program.
GDP Forecast
Gross domestic product will probably shrink between 0.1 percent and 0.4 percent in the second quarter before stagnating in the third quarter and growing as much as 0.5 percent in the final three months of the year, the BCC said.
While the economy shrank 2.4 percent in the first quarter, the most since 1958, there are signs that the recession is easing. U.K. manufacturing probably rose for a third month in May by 0.2 percent, according to the median of 26 economists in a Bloomberg survey. The Office for National Statistics will release the figures at 9:30 a.m. in London today.
Job losses in manufacturing remain a concern and unemployment in the U.K. will rise to 3.2 million by the middle of next year, Kern said. British carmakers have benefited from the government’s scrappage plan giving consumers a 2,000-pound subsidy to trade in old cars for new ones, and more programs of the kind are needed, he said.
A total of 29,796 vehicles have been registered under the scrappage plan since it was implemented on May 16, giving carmakers “a much needed boost,” the Society of Motor Manufacturers and Traders said yesterday.
“We should have more schemes that support businesses that are basically viable and are being forced to discard skilled labor,” Kern said. “The pressure on jobs is still very serious. It’s an area which has serious implications

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Australia May Keep Key Rate at 3% for Third Month (Update1)

july7 Australia’s central bank may leave interest rates unchanged for a third month amid signs the lowest borrowing costs in half a century and government spending are helping the economy skirt the global recession.
Reserve Bank Governor Glenn Stevens will keep the overnight cash rate target at 3 percent at 2:30 p.m. in Sydney today, according to all 20 analysts surveyed by Bloomberg News.
Australia was one of few major economies including China and India to grow in the first quarter as government cash handouts and rate cuts stoked consumer spending. Growth may slow after reports recently showed exports dropped to a 14-month low, bank lending fell, home building approvals declined by the most since 2002 and job advertisements tumbled for a 14th month.
“The bank has been in ‘watch-and-wait’ mode, assessing the impact of previous aggressive rate cuts,” said Bill Evans, chief economist at Westpac Banking Corp. in Sydney. “The bank is unlikely to see an immediate need for additional stimulus.”
Governor Stevens, who slashed borrowing costs by a record 4.25 percentage points in six moves between September and April, said last month he has scope to cut rates further if needed.
Australia’s “smaller downturn than most countries” reflects the nation’s limited exposure to “financial excesses that have been the problem in some other countries, as well as the good fortune of our position in relation to China,” Stevens said on June 4.
Economic Growth
Gross domestic product rose 0.4 percent in the first quarter from the previous three months, in contrast to a 3.8 percent decline in Japan and a 1.4 percent contraction in the U.S.
Retail sales increased 1 percent in May, twice as much as economists estimated, buoyed by spending at department stores and restaurants. The services industry expanded for the first time in 15 months in June.
The surge in spending is boosting earnings at companies including David Jones Ltd. The nation’s second-largest department store chain said last week that earnings after tax will rise by between 20 percent and 30 percent in the six months ending July 25.
Prime Minister Kevin Rudd’s government has distributed A$12 billion ($9.6 billion) in cash handouts to households this year and is spending A$22 billion to upgrade roads, railways, ports and schools.
Mortgage Repayments
“The combined impact of fiscal and monetary policy easing has been more effective in boosting spending and confidence than even the optimists had hoped,” said Richard Gibbs, a senior economist at Macquarie Group Ltd. in Sydney.
“While recent reports suggest there is no urgent need for lower mortgage interest rates, they nevertheless will need to be kept low for an extended period.”
Households with an average A$250,000 home loan are paying A$7,000 a year less than they were at the start of September, which is equal to about 8 percent of family incomes, according to Reserve Bank calculations.
“Our expectation remains that the economy will be well placed for expansion toward the end of this year,” Stevens said on June 4.
Policy makers in the U.S., Europe and the U.K. are also keeping borrowing costs unchanged to spur their economies. The European Central Bank left its benchmark rate at a record low of 1 percent on July 3, and the Bank of England will keep its rate at 0.5 percent on July 9, economists predict. The U.S. Federal Reserve has held the overnight lending rate at between zero and 0.25 percent since December.
Asia Recovery The cash rate is “all but certain to be left on hold,” said Craig James, a senior economist at Commonwealth Bank of Australia in Sydney. “Conditions in the Australian economy have improved, with confidence, spending and housing lending markedly stronger, while V-shaped recoveries are emerging in Asia.”
China’s manufacturing expanded for a fourth month in June, Japan’s industrial output rose for a third month in May and South Korean manufacturers’ confidence reached a nine-month high in July, recent reports show.
Signs of a pickup in Australia’s economy have prompted investors to increase bets the benchmark interest rate will be higher in 12 months, according to a Credit Suisse Group AG index based on swaps trading.
Traders forecast the key rate will be 55 basis points higher in a year, the index showed at 12:19 p.m. in Sydney. After the bank’s June 2 meeting, they tipped 26 points of gains.

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Mexico’s Peso, Stocks Fall as Calderon’s Party Loses Election

Mexico’s peso and stocks fell to a two-week low after President Felipe Calderon’s party lost congressional seats in midterm elections, adding to concern the government will struggle to implement tax increases that economists say are needed to narrow a budget gap.
The peso weakened 0.1 percent to 13.24 per U.S. dollar at 5 p.m. New York time. It touched 13.3755, the weakest since June 23. Mexico’s Bolsa, the nation’s benchmark stock index, tumbled 1.3 percent to 23,742.49.
“This is not a market-friendly result,” said Jaime Ascencio, a fixed-income strategist at Actinver SA, Mexico’s biggest independent money manager, in Mexico City. “This result makes it very likely that Mexico’s credit rating will be cut.”
Calderon will need “a lot of negotiation” to pass changes to tax laws through a divided congress, Standard & Poor’s analyst Lisa Schineller said in an interview from New York. The loss by Calderon’s party raises the odds that legislation to buoy tax revenue may be “diluted” by lawmakers before being passed, said Shelly Shetty, an analyst at Fitch Ratings.
S&P cut the outlook on Mexico’s foreign debt to negative from stable in May, six months after Fitch did. S&P and Fitch both rate Mexico’s foreign debt BBB+, the third-lowest investment grade level.
Calderon’s National Action Party, or PAN, took 28 percent of the votes in the July 5 election to renew all 500 lower house seats while the opposition Institutional Revolutionary Party, or PRI, won 36.7 percent of the vote, according to 99.5 percent of all votes counted by the Federal Electoral Institute.
The PAN currently has 41 percent of lower house seats and the PRI has 21 percent in the outgoing congress.
‘Reform Momentum’
“The election result is not the one that would induce significant reform momentum in Mexico,” Shetty said in an interview from New York. “We cannot completely rule out that some sort of fiscal reform is going to be passed. But we have to see whether it’s diluted or whether it will make a dent on improving public finances.”
PRI’s victory will be “negative” for the markets because of the potential for legislative gridlock, UBS AG said.
“Congressional dynamics are set to make for the passing of a reform agenda that much harder,” analysts led by Tomas Lajous wrote in a note. “The results are negative for markets, but only marginally.”
Grupo Simec SAB, a unit of Mexico’s largest steelmaker, and Banco Compartamos SA, a Mexican bank that lends to low-income customers, led declines on the Bolsa index.
Recession
Calderon’s setback comes after the economy sank into its first recession in eight years as the slump in the U.S. curbed demand for exports and trimmed flows from remittances, foreign direct investment and tourism. Mexico’s economy will contract 5.5 percent this year, according to the government.
That contraction has swelled the budget deficit and exposed the government’s dependence on oil income. The Finance Ministry is projecting the public sector deficit may grow to 3 percent of gross domestic product this year form 2.1 percent in 2008.
The government collects 37 percent of its revenue from oil, whose production dropped 6.5 percent in May from a year earlier after falling 9.2 percent in 2008.
“Mexico has a serious fiscal challenge that the whole world is waiting to see resolved,” said Luis Garcia Pena, chief executive of Investra Consultores SA in Monterrey, Mexico, which manages $750 million in assets. Investors are “waiting for the messages from the PRI, which has re-conquered congress, to see how much attention they’ll pay to issues like fiscal reform.”
Polls before the elections predicted the loss by Calderon’s party. Mexico City-based Consulta Mitofsky forecast the PAN would get 29 percent of the vote and that the PRI would take 34 percent, according to the poll of 2,000 people conducted June 25-28 with a margin of error of 3.1 percentage points.
Further Peso Weakening
“We saw this coming,” said Antonio Magana, head of the foreign-exchange trading desk at Grupo Financiero Interacciones SA in Mexico City. That limited declines in the peso, he said.
Today’s peso drop extended a slide last week fueled by concern surging unemployment in the U.S. will delay an economic recovery. Mexico sends 80 percent of its exports to the U.S.
The peso may continue to weaken, said Win Thin, senior currency strategist at Brown Brothers Harriman & Co.
“The fundamentals and the politics are all lining up against the peso now, especially with the U.S. data being weak,” said Thin, who is based in New York.
Yields on Mexico’s 10 percent bond due December 2024 fell six basis points, or 0.06 percentage point, to 8.37 percent. The bond’s price rose 0.55 centavo to 114.02 centavos per peso, according to Banco Santander SA

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Pound Falls on Report of BOE Purchases, Waning Earnings Outlook

July 6 The pound tumbled and 10-year gilt yields fell the most in more than two weeks on speculation the Bank of England plans further action to boost the economy and as forecasts for weakening company earnings hurt stocks.
The British currency extended its first weekly drop against the dollar in a month after the Sunday Times said the central bank may increase its program of asset purchases by 25 billion pounds ($40 billion) amid signs that the economic recovery is petering out. Government bonds rose as the FTSE 100 Index slid to the lowest level in more than two months, boosting demand for the safety of fixed-income assets.
“We’re going to see this sterling move coming further as the market gets increasingly nervous about this recovery,” said Ian Stannard, a currency strategist at BNP Paribas SA in London. “Green shoots might be premature and sterling is going to be vulnerable given its cyclical characteristics.”
The pound dropped 1.5 percent to $1.6096, the lowest level since June 9, before trading at $1.6225 as of 5:12 p.m. in London. It fell 1.7 percent to 154.23 yen and lost 0.3 percent to 85.86 pence per euro.
The U.K. currency gained 11 percent against the dollar and the euro this year. In the past two weeks, it dropped more than any of the 16 major currencies as the prospects of an early revival in Europe’s second-largest economy diminish. Gross domestic product will shrink 4.3 percent this year, the Organization for Economic Cooperation and Development said June 24.
Expanded Plan
The Shadow Monetary Policy Committee, a group of economists organized by the London-based Institute of Economic Affairs, called for the government to raise the 150-billion-pound limit on the Bank of England’s asset-purchase plan, the Sunday Times reported yesterday. The newspaper didn’t say where it got the information on the Bank of England’s plans.
“Sterling is coming under increasing pressure as the market focuses on this week’s MPC announcement and the potential expansion of the quantitative-easing program,” Paul Day, chief market analyst at MIG Investments SA in Neuchatel, Switzerland, wrote in an e-mail today. “I continue to favor sterling to underperform after its recent good run.”
Gilts extended gains after the Bank of England paid above- market prices when buying 3.5 billion pounds of gilts maturing between 2020 and 2032 as part of its asset-purchase plan. The bank said it paid an average of 109.52 for 1.1 billion pounds of the 4.75 percent security due March 2020, compared with a market price of 109.21 before the results were announced, according to my blog calulation.
Quantitative Easing
The central bank will buy a further 3 billion pounds of gilts maturing between 2015 and 2019 on July 8, the day before its next interest-rate decision. The Bank of England pledged to spend 125 billion pounds buying bonds in its so-called quantitative-easing program.
Stocks fell around the world and government bonds advanced amid growing concern earnings at the biggest companies will keep falling in the coming three months. The FTSE fell as much as 1.5 percent to 4172.33, its lowest level since April 30.
The year-over-year decline in profit for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after declines of an estimated 34 percent in the second quarter and about 60 percent in the year’s first three months, according to data compiled by S&P and Bloomberg.
The yield on the 10-year gilt declined six basis points to 3.67 percent after falling as low as 3.64 percent. The 4.5 percent security due March 2019 rose 0.51, or 5.1 pounds per 1,000-pound face amount, to 106.74. The yield on the two-year note fell six basis points to 1.18 percent.
U.K. government bonds lost investors 0.3 percent this month, compared with a gain of 0.3 percent for U.S. debt and 0.4 percent for German securities, according to Merrill Lynch & Co.’s U.K. Gilts, U.S. Treasury Master and German Federal Governments indexes.

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Yen as ‘Winner’ Currency Makes Little Sense, Commerzbank Says

July 6 Commerzbank AG said it’s skeptical the yen will emerge as the “winner” against the dollar and the euro because the economic slump in Japan is as severe as it is in Europe and the U.S.
“In the current situation this makes particularly little sense,” a team led by Ulrich Leuchtmann in Frankfurt wrote today in a report. “The fundamental situation in Japan is at least as depressed as in the U.S. and in the euro zone. The green shoots in Japan are much more fragile.”
The yen rose 1.3 percent to 132.49 per euro as of 12:26 p.m. in London and strengthened 0.7 percent against the dollar to 95.34.

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