Vietnam's June Reserve Increase Will Be Last for Now, Policy Maker Says

(Bloomberg) -- Vietnam's recent increase in bank
reserves will be the last for now as the government assesses the
effect on inflation, said the policy maker in charge of banking.

Any perceived reluctance to quell the fastest inflation in
17 months is likely to deter overseas investors from buying
Vietnam's stocks and bonds. The threat of inflation ``calls for
action'' by the central bank to reduce the amount of money in the
banking system, HSBC Holdings Plc said in research last week.


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Fed to weigh hit of credit crunch

(Reuters) - The Fed is widely expected to hold overnight interest rates steady at 5.25 percent, where they have been for more than a year. The policy-setting Federal Open Market Committee is expected to release a statement outlining its views on the economy at around 2:15 p.m. on Tuesday.




Markets will watch keenly for any sign the U.S. central bank, which has persistently identified the risk of inflation as its main concern, is beginning to worry a bit more about the potential for an undesirable weakening in the economy.


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US STOCKS-Wall St. rises on data, GM earnings

(Reuters) - NEW YORK, July 31 - U.S. stocks climbed on
Tuesday after General Motors Corp. added to optimism
about corporate earnings and a key inflation indicator showed a
smaller-than-expected rise.




GM shares jumped 6 percent to $34.56 after the blue-chip
automaker swung to a profit in the second quarter and handily
topped Wall Street's expectations. For details, see
[ID:nN30442082].


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Core inflation softens in June

(Reuters) - The 0.1 percent rise in the core personal consumption price index "should be reassuring to the Fed," said Camilla Sutton, currency strategist at Scotia Capital in Toronto.




U.S. stock index futures rose on the weak inflation data and a stronger-than-expected earnings report from General Motors . U.S. government debt prices fell despite the inflation report, and the dollar was lower against the euro.


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Consumer Spending Probably Slowed in June on Gas Prices, Economists Say

(Bloomberg) -- Consumer spending in the U.S. rose
in June at the slowest pace in nine months as near-record
gasoline prices and falling home values forced Americans to cut
back, economists said ahead of a government report today.

Spending increased 0.1 percent after rising 0.5 percent in
May, according to the median of 77 estimates in a Bloomberg News
survey before the Commerce Department release. The report's
inflation measures may show little change.


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Trichet, Poised to Raise Interest Rates, Follows in Bundesbank Footsteps

(Bloomberg) -- The European Central Bank might be
run by a Frenchman; its heart and soul belong to Germany's
Bundesbank.

ECB President Jean-Claude Trichet faces political pressure
to stop raising interest rates, and some of his own policy
makers query the extent of the inflation threat in Europe.
Still, investors are betting he'll push borrowing costs higher,
upholding the legacy of Germany's central bank, which celebrates
its 50th anniversary tomorrow.


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Taiwan 10-Year Bonds Fall on Concern Higher Oil Prices Will Spur Inflation

(Bloomberg) -- Taiwan's government bonds declined
on speculation an increase in crude oil prices will spur
inflation. The currency was little changed.

Ten-year notes ended a three-day gain after oil rose to the
highest in nearly a year in New York last week as a government
report showed the U.S. economy, the world's biggest consumer,
grew faster than expected last quarter. Inflation erodes the
purchasing power of the fixed-income payments from debt.


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Bernanke's Forecast of Stronger Growth Is Under Threat by Market Turmoil

(Bloomberg) -- The week's turmoil in financial
markets casts doubt on the Federal Reserve's forecast of a
gradual U.S. economic recovery in the second half, raising the
odds it will need to shift its focus to spurring growth from
fighting inflation.

The turbulence, as stocks suffered their worst drop in five
months while corporate borrowing costs soared, threatens a triple
whammy for the economy. It robs investors of spending power,
makes business investment more expensive and may prolong the
housing recession.


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European Government Bonds Reverse Gains After Germany's Inflation Reports

(Bloomberg) -- European government bonds reversed
earlier gains after reports showed inflation quickened in
Germany, stoking speculation the European Central Bank will raise
interest rates further.

Bunds fell for the first day in four after data showed
consumer-price inflation accelerated across Europe's largest
economy in July, fueled by rising holiday costs and energy
prices. Government debt had gained earlier as a slump in global
stocks and U.S. subprime losses prompted investors to buy the
safest assets.


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New Zealand Dollar Declines as Bollard Suggests Rate Increase May Be Last

(Bloomberg) -- New Zealand's dollar had the biggest
slide in a month and bonds rose after central bank Governor Alan
Bollard signaled an interest-rate increase today may be the last.

The local dollar fell against all of the 16 most-active
currencies as Bollard said a 1 percentage point move in rates
this year to a record 8.25 percent should be enough to contain
inflation. A 28 percent surge in New Zealand's currency against
the U.S. dollar in the past year is ``not sustainable'' he said.


Read more at Bloomberg Currencies News

Brazilian Real Holds Near Highest Since September 2000 as Inflation Slows

(Bloomberg) -- Brazil's real held near the highest
since 2000 after an inflation report showed consumer prices rose
at a slower pace this month, boosting confidence the value of
local fixed-income assets will stay attractive. Bonds gained.

Signs of cooling inflation also increased bets the central
bank will have room to continue to reduce interest rates this
year, fostering economic growth. Brazilian central bankers have
lowered the benchmark lending rate by 8.25 percentage points
over the past two years to a record low of 11.50 percent.


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White House top economist: inflation in check

(Reuters) - "As of now we just don't see any evidence that that is the case," Lazear told a group of economists at a luncheon.




He said that an overall rise in oil prices is due in part to global demand but strong productivity growth has helped to offset the higher oil prices and keep inflation under control.


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UPDATE 3-Canada May retail sales soar, suggest rate hikes

(Reuters) - Retail sales soared 2.8 percent in the month, Statistics
Canada said, the biggest monthly increase in nearly a decade,
and well ahead of analyst forecasts of 0.5 percent.




The strong result suggested domestic spending will continue
to underpin inflation pressures, and prompted analysts to
predict continued interest rate hikes from the Bank of Canada.


Read more at Reuters.com Economic News

Australian Dollar Trades at 18-Year High on Speculation of Rate Increase

(Bloomberg) -- The Australian dollar rose to an 18-
year high against the U.S. currency as some traders raised bets
the central bank will increase interest rates next month to slow
inflation. The currency dropped versus New Zealand's dollar.

Australia's dollar is the third-best performer this month
among the 16 most-active currencies as an index calculated by
Credit Suisse Group suggested speculators are increasing the odds
of higher borrowing costs. A report yesterday showed producer
prices gained more than expected in the second quarter and
figures tomorrow may show inflation accelerated.


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Nigerian inflation climbs to 6.4 pct in June

(Reuters) - Nigerian consumer price inflation accelerated to 6.4 percent year-on-year in June from 4.6 percent in May, the National Bureau of Statistics said on Friday -- a setback to government which has made low inflation a priority.

"The rise in the index was caused mainly by increase in the price of some food items, fuels, some building materials, transportation and services," the bureau said in a statement.


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Lower food prices help ease Malawi inflation

(Reuters) - Good maize harvests continue to help drive down inflation in Malawi, with the headline number easing to 7.7 percent year-on-year in June from 7.9 percent in May, the National Statistical Office (NSO) said on Thursday.

It said food inflation, which accounts for 58.1 percent of the impoverished southern African country's Consumer Price Index (CPI), dipped to 6.8 percent.


Read more at Reuters Africa

China Economy Expands 11.9 Percent in Second Quarter, Fastest in 12 Years

(Bloomberg) -- China's economy grew at the fastest
pace in 12 years in the second quarter and inflation accelerated
the most in nearly three, adding pressure on the government to
raise interest rates and cool investment.

Gross domestic product expanded 11.9 percent from a year
earlier, the statistics bureau said in Beijing today, up from
11.1 percent in the first quarter. Inflation climbed to 4.4
percent in June, breaching the central bank's annual 3 percent
target for a fourth month.


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Treasuries Rise on Forecasts From Bernanke, Weakness in Subprime Mortgages

(Bloomberg) -- Treasuries rose, pushing the
benchmark 10-year note's yield below 5 percent, after Federal
Reserve Chairman Ben S. Bernanke predicted inflation will recede
and said housing market weakness may slow economic growth.

The Fed also trimmed its forecast for economic growth this
year because of a slowdown in homebuilding, and an index linked
to the lowest-rated securities backed by subprime mortgages fell
to a record.


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Treasuries Little Changed Before Bernanke, Report on International Demand

(Bloomberg) -- Treasuries were little changed
before testimony by Federal Reserve Chairman Ben S. Bernanke
tomorrow, and a report today forecast to show waning foreign
demand for U.S. assets.

U.S. 10-year notes snapped two days of gains fueled by
speculation losses in securities backed by subprime mortgage
loans would increase demand for safer government debt. Bernanke
may reiterate in his semi-annual testimony that policy makers
are focused on restraining inflation, suggesting the Fed won't
lower its benchmark interest rate from 5.25 percent this year.


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Dollar Trades Near Record Low Before Inflation, Treasury Holdings Reports

(Bloomberg) -- The dollar traded near a record low
against the euro before U.S. government reports that economists
forecast will show slowing inflation and waning foreign demand
for U.S. securities.

Yields on 10-year Treasury notes yesterday fell for a
second day, diminishing the appeal of holding dollar-denominated
assets. Traders have stepped up bets the Federal Reserve will
cut interest rates before Chairman Ben S. Bernanke delivers
testimony before the House Financial Services Committee tomorrow.


Read more at Bloomberg Currencies News