Polish Zloty Set for Weekly Gain as Investors' Appetite for Risk Revives

(Bloomberg) -- The Polish zloty was poised for a
weekly gain, advancing to an eight-day high against the euro as
investors regained their appetite for emerging-market assets.

Investors resumed buying stocks and higher-yielding
currencies such as the zloty, the Turkish lira and the South
African rand as concern abated that losses on U.S. subprime
mortgages would slow global economic growth.


Read more at Bloomberg Currencies News

UPDATE 2-DynCorp posts Q1 profit, shares fall on contract fears

(Reuters) - The U.S. Government Accountability Office is reviewing a
$4.6 billion Army linguistics contract awarded to a DynCorp
joint venture, after the current holder of the contract, L-3
Communications Holdings challenged the award.




"Investors are missing the big picture, that in the end,
DynCorp has a very good chance of winning this award," Stanford
Group analyst Erik Olbeter said.


Read more at Reuters.com Market News

Cheapest Stocks in 16 Years Entice Investors After $2.1 Trillion Decline

(Bloomberg) -- Investors are preparing to snap up
shares of telephone, health-care and computer companies after
last week's $2.1 trillion global stock market rout left U.S.
equities the cheapest in 16 years.

``The window for buying is starting to open,'' said D.A.
Davidson & Co. chief market strategist Frederic Dickson, who
oversees $23 billion. His Great Falls, Montana-based firm plans
to buy drug and technology stocks as long as bond market losses
don't worsen.


Read more at Bloomberg Stocks News

Treasuries Head for Biggest Weekly Gain Since March Amid Risk Aversion

(Bloomberg) -- Treasuries are headed for the
biggest weekly advance in four months as the slump in U.S.
housing drives investors from riskier assets for a third week.

Investors seeking the safety of government debt this week
pushed yields on two-year notes, most sensitive to changing
monetary policy, 71 basis points lower than the Federal
Reserve's target rate. The risk of owning corporate bonds soared
to a record on concern that banks and hedge funds face widening
losses on subprime mortgages and leveraged buyouts.


Read more at Bloomberg Bonds News

Hungary's Forint Posts Weekly Drop Versus Euro as Investors Avoid Risk

(Bloomberg) -- The Hungarian forint posted its
biggest weekly drop against the euro in 10 months as tumbling
global stocks and concern about U.S. subprime mortgage losses
prompted investors to shun emerging markets.

The forint was the worst performer against the euro over the
past five days, sliding more than 2 percent, as the NTX Index of
stocks in central Europe's 30 largest companies declined the most
in a week since March. Investors reversed trades where they'd
bought the forint to take advantage of Hungary's 7.75 percent
interest rate, also sending the currency tumbling.


Read more at Bloomberg Currencies News

TREASURIES-Bonds rally on stock slide, credit woes

(Reuters) - Bonds could get an additional lift if the durable goods
data at 8:30 a.m. shows signs of weakness in
business investment. Investors were also awaiting new home
sales data at 10 a.m. amid concerns that the housing
market is a drag on the U.S. economy.




But for now, with weak stocks and news of firms having
difficulty obtaining financing for buyout activity, Treasuries
were seeing a strong bid.


Read more at Reuters.com Bonds News

Potential CDO downgrades climb to $1.4 bln - Fitch

(Reuters) - Investors have been expecting downgrades on CDOs will
follow cuts to the underlying mortgage bonds that have been
mounting at a rapid pace this month. Mortgage bonds were
increasingly favored for yield in CDOs until last year as the
slumping U.S. housing market revealed unsound underwriting
practices and excessive credit.




CDOs are created by taking portions of debt securities and
packaging them into new bonds that are split into several
classes by degree of risk.


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Structured Vehicles Are `Oasis of Calm' in Subprime Crisis, Moody's Says

(Bloomberg) -- So-called structured investment
vehicles, which hold $370 billion of assets, represent ``an
oasis of calm'' among debt issuers linked to subprime mortgages,
according to Moody's Investors Service.

Moody's expects ``ratings in the SIV and hybrid SIV sectors
to remain stable amid the current maelstrom surrounding the U.S.
subprime housing market,'' partly because of the diversity of
their portfolios, analyst Henry Tabe in London said in a
statement summarizing the firm's July 20 report.


Read more at Bloomberg Bonds News

Wells Fargo pulls popular subprime loan from mix

(Reuters) - The company in an e-mail said it ended on Friday retail offerings of so-called 2/28 loans, which at 65 percent of all subprime mortgages last year are the staple of the industry. Payments on 2/28 adjustable-rate mortgages are based on rates that are fixed for two years and then are adjusted twice a year for the remaining 28, if the loan is not refinanced.




Decisions were partly driven by the $583 billion market for subprime mortgage bonds, where sales rely on opinions of rating companies such as Moody's Investors Service, Wells Fargo said. Rating companies in the past two weeks have unleashed a flood of downgrades on subprime bonds in response to rising delinquencies and increased their assumptions of losses that new loans will produce.


Read more at Reuters.com Bonds News

Japan's Nikkei 225 Average, Topix Falls; Exporters Drop on U.S. Earnings

(Bloomberg) -- Japanese shares dropped, paced by
companies that rely on the U.S. market, after Caterpillar Inc.
said its profit dropped on lower North American sales. Exporters
such as Honda Motor Co. and Komatsu Ltd. declined.

Investors also refrained from betting heavily on stocks
before the upper house election, which will be held on July 29.
The Nikkei newspaper reported yesterday Japan's ruling coalition
may lose its majority in the election, citing its own poll.


Read more at Bloomberg Stocks News

Yen Erases Declines Versus Euro, Dollar as Stock Futures Signal Lower Open

(Bloomberg) -- The yen erased a decline versus the
euro and dollar as futures on U.S. stock indexes fell, a sign
investors are pulling back from risky bets.

Investors who are less inclined to take risks may exit so-
called carry trades, where they borrow at Japan's low interest
rates to buy higher-yielding securities elsewhere. The Japanese
currency also dropped earlier after China raised rates to cool
economic growth, prompting speculation demand for Japanese
exports in its third-largest market will slow.


Read more at Bloomberg Currencies News

MBIA, Ambac Risk Trading at Junk Levels on Subprime Default Concerns

(Bloomberg) -- The perceived risk of holding the
bonds of MBIA Inc. and AMBAC Financial Group Inc., owners of the
two largest AAA rated bond insurance companies, has jumped to
speculative grade on worries about subprime-mortgage defaults.

Credit-default swaps based on $10 million of MBIA's bonds
more than doubled in the past month to $114,000, while Ambac
contracts tripled to $91,000, according to CMA Datavision in
London. Those levels imply a credit rating of Ba2 for MBIA and
Ba1 for Ambac, the two highest junk ratings, according to the
credit-strategy group at Moody's Investors Service.


Read more at Bloomberg Bonds News

United Technologies Options Are `Bullish' Before Tomorrow's Profit Report

(Bloomberg) -- Investors are using options to bet
United Technologies Corp. shares will gain after the company
reports second-quarter results tomorrow, according to analysts at
Strategic Option Consulting and Susquehanna Financial Group.

Trading in calls, or options to buy shares of the maker of
Otis elevators and Pratt & Whitney jet engines, surged to 48,831
contracts yesterday. That was the most in two months and an 11-
fold increase from the 20-day average. At the same time, United
Technologies shares advanced 2.2 percent, the most since January,
to a record $76.67.


Read more at Bloomberg Stocks News

Treasuries Fall as Investors' Concern Over Subprime Mortgage Crisis Eases

(Bloomberg) -- Treasuries fell for the first time
in three days as concern ebbed about losses in securities backed
by subprime mortgage loans.

Investors sold government debt after Merrill Lynch & Co.,
the third-biggest U.S. securities firm, said second-quarter
profit rose 31 percent even as revenue declined in the unit that
includes its mortgage business.


Read more at Bloomberg Bonds News

Criminal probes often weigh on debt ratings - study

(Reuters) - The report by Moody's Investors Service looked at
the credit rating agency's actions regarding companies that
reached pretrial agreements with federal prosecutors
investigating allegations of wrongdoing.




These pacts, generally called deferred prosecution or
non-prosecution agreements, have become increasingly common as
companies in the government's crosshairs seek to avoid the fate
of accounting firm Arthur Andersen, which went out of business
following its indictment in 2002.


Read more at Reuters.com Bonds News

FTSE weighed by miners, worries over US economy

(Reuters) - Britain's top share index fell on Tuesday as miners suffered downgrades and investors braced for U.S. inflation data after fresh fears over the subprime mortgage market fuelled concerns about the state of the world's largest economy.

Investors were also unsettled by a UK inflation report that showed price pressures remained strong, stoking fears of higher interest rates.


Read more at Reuters Africa

U.K. Pound Rises to 26-Year High Against Dollar After June Inflation Data

(Bloomberg) -- The pound rose to a 26-year high
against the dollar after a report showed U.K. inflation exceeded
the Bank of England's 2 percent limit for a 14th month in June.

The U.K. currency posted its biggest gain in a week on
speculation the BOE will keep raising interest rates while the
Federal Reserve stays on hold, increasing the attraction of
pound-denominated assets. Investors raised bets on how high BOE
policy makers will lift borrowing costs following the release of
the inflation report, futures trading shows.


Read more at Bloomberg Currencies News

Pound Rally Fools Biggest Traders as Rising Bond Yields Lure Kokusai, Axa

(Bloomberg) -- Investors who listened to the world's
three biggest currency traders and bet against the pound this
year couldn't have been more wrong.

Instead of falling, the U.K. currency has risen 3.8 percent
to a 26-year high of $2.0367. Strategists at Frankfurt-based
Deutsche Bank AG, UBS AG in Zurich and Citigroup Inc. of New York
predicted in December it would trade at $1.96 or lower this year.


Read more at Bloomberg Currencies News

European Government Bonds Post Weekly Gain on Subprime Mortgage Concerns

(Bloomberg) -- European government bonds posted
their biggest weekly gain in more than four months after concern
about the U.S. subprime mortgage sector crimped demand for
riskier assets.

Government debt advanced after Moody's Investors Service
lowered ratings on $5.2 billion of bonds backed by U.S. subprime
mortgages and Standard & Poor's said it may cut credit ratings on
$7.4 billion of similar debt. Bunds extended their rally
yesterday after a U.S. report showed retail sales fell more than
expected last month, stoking concern about an economic slowdown.


Read more at Bloomberg Bonds News

Japan's Bond Futures Advance After Downgrades of U.S. Subprime-Backed Debt

(Bloomberg) -- Japan's 10-year bond futures rose in
the past week after downgrades of debt backed by U.S. subprime
mortgages sparked demand for the safety of government securities.

Bond futures on July 11 had the biggest gain since August
after Moody's Investors Service cut ratings on $5.2 billion of
debt backed by loans to homeowners with poor credit histories.
Concern economic growth in the U.S., Japan's largest export
market, will slow helped bond futures rebound from the steepest
weekly drop since last month.


Read more at Bloomberg Bonds News