NEW YORK, Feb 3 (Reuters) – If the U.S. economy grows anemically, already stretched government finances will be crimped, potentially putting downward pressure on the top Aaa U.S. rating, said Moody’s Investors Service on Wednesday.

“Economic growth is very important to our assessment (of the sovereign rating),” said Steven Hess, senior credit officer in the sovereign risk group with Moody’s Investors Service in New York.

The Obama administration has based its projections of reducing the budget deficit over time on solid economic growth forecasts, but Hess warned that productivity might be lower than before the global financial crisis.

“Right now we are semi-optimistic that the U.S. will regain its previous dynamism, but if it doesn’t, then we have to think about what that implies for government finances,” Hess said in a telephone interview with Reuters.

NEW YORK (Reuters) – A White House proposal to curb excessive risk-taking by banks has sparked fears it could crimp banks’ access to funding, which Standard & Poor’s on Tuesday said might cause it to downgrade its U.S. banking system assessment.

The biggest fear is that new regulations on risk-taking could expose bank bondholders to a greater chance of losses, which would undermine the attractiveness of bank bonds, said Tanya Azarchs, managing director, financial institutions ratings, with Standard & Poor’s in New York.

Legislation “could be detrimental to bondholders and could affect the BICRA rating further,” Azarchs said on a panel debate at an S&P conference on banking in New York.

The BICRA, or banking industry country risk assessment, reflects the chances that a country’s banking system may experience a systemic failure, Azarchs said. It is one of several factors S&P considers when determining a country’s credit rating.

NEW YORK (Reuters) – Emergency funding the U.S. government provided during the credit crisis has left financial institutions with huge cut-price loans that could harm banks’ profits and economic growth once borrowing costs rise.

Banks that borrowed cheaply in the corporate bond market with a government guarantee will see their borrowing costs rise sharply once the debt matures, analysts said. That may swell bank expenses and constrain their ability to lend.

By some time in 2012, about $309 billion of government-guaranteed debt outstanding under the Temporary Liquidity Guarantee Program (TLGP) will mature. Banks will have to refinance with their own stand-alone debt and will likely pay bondholders much higher yields.

“The rise in debt costs…will implicitly reduce banks’ ability to lend,” said Tim Backshall, chief strategist with Credit Derivatives Research, LLC.

NEW YORK, Jan 28 (Reuters) – The U.S. commercial paper market, a vital source of short-term corporate funding, expanded in the latest week, Federal Reserve data showed on Thursday, hinting the economy was still growing.

Businesses use short-term borrowing to finance restocking of shelves and to pay wages, so the increase in the debt issuance suggests companies are anticipating demand growth.

After dwindling to roughly half its $2.2 trillion peak size over two years during the credit crisis, the commercial paper market started growing again for three months through late October. Since then, the recent expansion trend has stalled.

For the week ended Jan. 27, the size of the market increased by $54.8 billion to $1.147 trillion outstanding from $1.092 trillion the previous week.

NEW YORK (Reuters) – U.S. consumer confidence in January hit its highest level in nearly a year and a half, but a closely watched housing index showed an unexpected decline in November home prices, giving a mixed picture of the economic recovery.

The Conference Board, an industry group, reported on Tuesday that consumer confidence rose for the third straight month in January, driven by improved economic conditions.

Its index of consumer attitudes rose to 55.9 in January, the highest reading since September 2008 and up from an upwardly revised 53.6 in December. The index topped the median forecast for a reading of 53.5 from analysts polled by Reuters.

“This really bodes well for consumer spending. It shows we are in a modest recovery and we will likely maintain a modest recovery for the next few quarters,” said Ward McCarthy, chief financial economist with Jefferies & Co in New York.

NEW YORK, Jan 26 (Reuters) – U.S. consumer confidence in January hit its highest level in nearly a year and a half, but a closely watched housing index showed an unexpected decline in November home prices, giving a mixed picture of the economic recovery.

The Conference Board, an industry group, reported on Tuesday that consumer confidence rose for the third straight month in January, driven by improved economic conditions.

Its index of consumer attitudes rose to 55.9 in January, the highest reading since September 2008 and up from an upwardly revised 53.6 in December. The index topped the median forecast for a reading of 53.5 from analysts polled by Reuters. For details, see [ID:nN26357538]

“This really bodes well for consumer spending. It shows we are in a modest recovery and we will likely maintain a modest recovery for the next few quarters,” said Ward McCarthy, chief financial economist with Jefferies & Co in New York.

NEW YORK (Reuters) – The next leg of a bear market in stocks has probably started and gold and corporate bonds are likely to slide as the U.S. economy suffers long-term weakness, technical analyst Robert Prechter said on Monday.

Prechter has previously said he believes the 2007-2009 markets crisis and U.S. recession were harbingers of a severe, longer economic downturn. His book “Conquer the Crash” first published in 2002 , warned about the dangers of a deflationary depression and Prechter maintains the United States economy will struggle for years to come.

“We probably have begun the next phase of the bear market,” said Prechter, president of research company Elliott Wave International in Gainesville, Georgia and known for predicting the 1987 stock market crash.

The U.S. S&P 500 index has fallen about 5 percent since hitting a 15-month peak on January 19 as some investors started to worry about the possibility of a double-dip recession.

NEW YORK, Jan 20 (Reuters) – Quarterly results from major U.S. banks including Bank of America Corp, <BAC.N> Citigroup, <C.N> and JPMorgan Chase & Co <JPM.N> have made stock investors hopeful and bond investors gloomy.

Although results have been helped by lower credit costs, the banks’ problems remain deep, and many bond investors are skeptical of any kind of rapid recovery.

“Stock investors are looking at their banks’ profitability and looking for that earnings growth, whereas the bond market is looking more at loan losses,” said William Larkin, fixed income portfolio manager at Cabot Money Management in Salem, Massachusetts.

While JPMorgan Chase reported its fourth-quarter profit soared to $3.3 billion on strong investment banking results, it suffered deep losses on mortgage and credit card loans, dampening hopes that consumer credit is on the mend.

NEW YORK, Jan 8 (Reuters) – U.S. corporate borrowers rang in 2010 by selling the third biggest amount of debt on record this week, seizing on favorable borrowing conditions for fear rates will start to climb.

Borrowers sold about $45 billion of investment-grade debt this week, which is on track to rank as the third biggest week after the period of April 20, 2008, which saw $47.6 billion in new issues, according to Thomson Reuters data.

The week of May 4, 2008, recorded $45.2 billion in new issues.

The borrowing spree shows banks and companies have not forgotten the global financial crisis that paralyzed lending markets only a year ago. Borrowers are intent on issuing debt while the going is still good, before any future market shocks, analysts said.

NEW YORK, Jan 7 (Reuters) – The U.S. commercial paper market had its biggest weekly percentage contraction in a decade, suggesting companies were nervous about the prospects for a sustained economic recovery, analysts said.

Businesses use short-term borrowing to finance restocking of shelves and pay wages, so the paring back of such debt issuance hints at worries that economic growth may falter again, after the longest U.S. recession in decades ended in 2009.

For the week ended Jan. 6, the size of the U.S. commercial paper market, a vital source of short-term funding for companies’ day-to-day operations, fell by $94.2 billion to $1.076 trillion outstanding, from $1.170 trillion outstanding the previous week, Federal Reserve data showed on Thursday.

“Businesses remain nervous about the pace of economic expansion over the next one or two quarters,” said Dan Greenhaus, chief economic strategist with Miller Tabak & Co. in New York.