US treasuries fall on interest rate speculation
Washington: Comments from Federal Reserve officials indicated that the US central bank would raise interest rates next month. Following this U.S. Treasuries fell for the second day.

Federal Reserve Bank of St. Louis president William Poole in an interview with the Wall Street Journal said slower growth alone would not be enough to keep inflation in check. Poole's comments followed remarks made yesterday by Chairman Ben S. Bernanke that increases in inflation are unwelcome and he will ensure that trend isn't sustained.

Yields on benchmark 10-year notes rose 2 basis points to 5.04 percent in New York, according to bond brokers. The price of the 5 1/8 percent note due in May 2016 fell 1/8, or $1.25 cents per $1,000 face amount, to 100 21/32. Yields on two-year notes rose about 2 basis points to 5 percent, equal to the Fed's 5 percent target for overnight loans between banks. Two-year yields have averaged 62 basis points more than the federal funds rate since policy makers started raising rates in June 2004.

Interest-rate futures indicate traders expect an 80 percent chance the Fed will raise its target rate at its meeting later this month, from 48 percent odds before Bernanke spoke.
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Delphi, union move closer to deal
Detroit: Auto parts supplier Delphi, which has declared bankruptcy, and the United Auto Workers Union are now close to a negotiated deal that would offer early retirement incentives for lower seniority workers, according to a report in the Detroit News.

The newspaper reported that at least seven former Delphi officials had received target letters from the Securities and Exchange Commission, a sign of progress in a two-year-old investigation of the company's accounting practices.

Delphi, a former subsidiary of General Motors, filed for Chapter 11 bankruptcy protection from creditors in October. The company wants to cut four-fifths of its hourly work force of 331,000 and cut wages from about $27 per hour to near $12.50 in order to emerge from bankruptcy more competitive.

But the company's threat of using bankruptcy to void its contracts has prompted a strike authorisation by the UAW, its biggest union. A protracted labour disruption at Delphi could effectively shut down production at GM. costing the automaker billions of dollars at a crucial point in its own turnaround effort, analysts have said.
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