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June 14, 2010, 3:44 p.m. EDT Credit spreads jump as investors seek safety May's market turmoil blows out spreads of high-yield and investment-grade debt By April H. Lee, MarketWatch NEW YORK (MarketWatch) -- Spreads between high-yield and investment-grade debt hit six-month highs last week as money fled to the safe haven of Treasury bonds -- just as it seemed investors were growing comfortable with riskier debt. Ianthe Jeanne Dugan suggests there are warning signs in the $2.8 trillion municipal-bond market, as numerous municipalities continue to struggle financially, but investors are not paying heed.

Main Bank of China Is in Need of Capital By KEITH BRADSHER HONG KONG — China’s central bank is in a bind. It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac. Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank’s tiny capital base. The bank’s capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from...

China seeks to dampen US dollar rumors BEIJING - China sought Sunday to dampen speculation it will conduct a massive sell-off of U.S. dollar holdings, with a central bank official saying the dollar remains a mainstay of its foreign exchange reserves. ADVERTISEMENT In an interview carried by the government's Xinhua News Agency, an unnamed official with the People's Bank of China said U.S. dollars and government bonds are "an important part of China's foreign reserve investments." China's $1.3 trillion in foreign exchange reserves are the largest in the world and are believed to be comprised largely of dollar assets, potentially...