Treasuries rose, recovering most of the losses sustained after the Federal Reserve said it would add more stimulus, as traders wagered a slowing global economy will pose challenges to policy makers seeking to lower unemployment.

Benchmark 10-year note yields fell for the first week this month as reports showed manufacturing shrank in the New York area, Europe and China. Atlanta Fed President Dennis Lockhart said yesterday the central bank may take further action if the labor market doesn’t show signs of greater strength. The U.S. will auction $99 billion of notes next week.

“Although the economy is not double-dipping into another recession, the growth we’re seeing is not robust,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “There’s nothing coming out of the Fed saying that they will not come in and purchase more Treasuries.”

The 10-year yield dropped 11 basis points, or 0.11 percentage point, to 1.75 percent this week in New York, according to Bloomberg Bond Trader prices. The price of the 1.625 percent note due in August 2022 added 32/32, or $10 per $1,000 face amount, to 98 27/32.

The benchmark note yield closed at 1.76 percent on Sept. 12, the day before the Fed announced it would begin a third round of debt purchases under quantitative easing to spur jobs and growth. The yield climbed, reaching a four-month high of 1.89 percent on Sept. 14, before dropping this week.

Long Bonds

Thirty-year yields slid 15 basis points to 2.94 percent, their 200-day moving average. They were at 2.92 percent on Sept. 12, and rose to as high as 3.12 percent on Sept. 17. The yields briefly reached below the moving average on Sept. 20. The level is seen by some traders as a barrier to further decreases....

http://www.bloomberg.com/news/2012-09-22/treasuries-recoup-most-qe3-loss...

The Free Syrian Army moved its command center from neighboring Turkey into a part of Syria that the rebel fighters described as “liberated,” while human-rights activists said President Bashar al-Assad’s forces killed dozens of people in intensified shelling and airstrikes.

Troops clashed with rebels near the town of Nasib along the border with Jordan, the Associated Press reported. Jordan’s border guards arrested militants early today after an exchange of gunfire, the state-run Jordanian news agency Petra reported.

United Nations envoy Lakhdar Brahimi, who was appointed to revive the UN’s peace efforts in Syria, said the crisis could spread regionally if the bloodshed isn’t contained, according to a Sept. 20 interview with Al Arabiya television. More than 26,000 people have died since the conflict between Assad’s opponents and the military began in March 2011, the U.K.-based Syrian Observatory for Human Rights said.

The Free Syrian Army’s command center is now in one of the“liberated areas” of Syria, FSA Commander Colonel Riad al-Assad said in a video aired by Doha-based Al-Jazeera today. He didn’t give the location or details of the facility.

About 80 Syrians, including rebels and members of the government’s forces, were among those killed today, the Syrian Observatory said. Nineteen people died as troops shelled the city of Aleppo, while 27 were killed in the suburbs of the capital, Damascus, the opposition Local Coordination Committees said in an e-mail today. Assad’s military also shelled and broke into homes in the towns of Deir al-Zour Daraa, Idlib, Raqqa and Hama, leaving scores of casualties, the group said....

http://www.bloomberg.com/news/2012-09-22/syria-blast-shakes-hama-as-troo...

Suicide blast kills 12 near Kabul’s airport in Afghanistan

Warning: Human Carnage (pic gallery)

http://www.washingtonpost.com/world/suicide-blast-kills-10-near-kabuls-a...

Israeli soldier, three gunmen killed near Egyptian border

A wounded Israeli soldier is wheeled into Soroka hospital in the southern city of Beersheba September 21, 2012.

Credit: Reuters/Dudu Grunshpan

JERUSALEM (Reuters) - Three armed militants slipped into Israel from Egypt's Sinai peninsula on Friday, killing an Israeli soldier and wounding another before being shot dead, the army said.

It was at least the fourth cross-border attack in just over a year - violence that has persisted despite an Egyptian army and police crackdown on Sinai militants begun last month.

The latest incident underscored deep Israeli concern about faltering security in Sinai since the fall of Egyptian president Hosni Mubarak in a democratic uprising in 2011. Israel is now building a fence along the desert border to improve security.

"A big terror attack was thwarted," Israeli army spokeswoman Lieutenant-Colonel Avital Leibovich said of Friday's violence.

"Three terrorists infiltrated from Sinai into Israel and opened fire towards IDF soldiers guarding the border. The terrorists were well armed and carried explosive belts upon their bodies," she added.

General Tal Russo, commander of Israeli troops in the region, said the gunmen ambushed soldiers who had just intercepted some African migrants trying to cross into Israel and were providing water to the group.

"In the first round of fire, one of our fighters was killed," Russo told reporters near the scene. Another soldier was wounded by shrapnel when a gunman blew up due to an explosives vest he was wearing, the general said.

Russo said he had no information on the affiliation of the gunmen but promised an Israeli response for the attack once their identities were discovered. Previous attacks were blamed on Palestinian militants from Gaza and supporters believed to have established bases in the sparsely inhabited Sinai.

An Egyptian security source said one of the gunmen died when a bomb he was carrying detonated and the other two were killed in a gun battle with Israeli forces. He added that the nationalities of the gunmen were not immediately known.

Israel is putting up the border fence both to bolster security and curb an influx of African migrants, hoping to finish it by the end of the year. It will run along most of the 266 km (165 miles) from Eilat on the Red Sea to the Gaza Strip.

Leibovich said Friday's attack occurred about halfway down the border near an area known as Mount Harif, where the barrier is still under construction.

In June, militants fired on Israelis building a section of the barrier, killing a worker, before soldiers shot dead two of the attackers.

In August, Islamist gunmen killed 16 Egyptian border guards in north Sinai and hijacked an armored vehicle which they smashed across the border before being killed by Israeli forces.

Shortly afterward, Egypt sent hundreds of troops backed by tanks, armored vehicles and helicopters into the region in a joint operation with police to raid militant hideouts, arrest suspects and seize weapons.

http://www.reuters.com/article/2012/09/21/us-israel-egypt-shooting-idUSBRE88K0I820120921

The 41-year-old refurbished transport vessel overseeing an international Middle East mine-hunting exercise can defend itself from Iranian speedboats with two new machine guns cued by long-range cameras bought under a special Pentagon program.

The USS Ponce is also carrying an underwater drone being tested that’s capable of taking sonar and video images of the Persian Gulf’s bottom in search of mines as deep as 300 meters (984 feet).

The BAE Systems Plc (BA/) 25mm guided ‘‘Mark 38 Mod 2,” and Kingfish unmanned underwater vehicle are among the programs the Pentagon this year accelerated under a “Fast Lane” initiative to counter Iranian naval weapons. One of the most serious threats, the Navy says, are Iranian speedboats that can employ“swarming” tactics.

The U.S. is boosting its naval presence in the area, which includes the Strait of Hormuz, through which a fifth of the world’s traded oil flows. Iranian officials have threatened to close the waterway in response to threats to force the Islamic Republic to abandon its suspected nuclear weapons program.

More than 30 nations are participating in the 12-day exercise that’s taking place in three locations from the mid-Persian Gulf, the Gulf of Oman to Djibouti and the Gulf of Aden.

Ships from the U.S., U.K., Japan and Iraq are participating. Countries including Yemen, Jordan, New Zealand,Estonia, Italy, Singapore and Australia are also taking part or acting as observers. The exercise is scheduled to end on September 27.

‘Toplight’ Camera

On the USS Ponce, the 25mm gun’s rotating “Toplight”camera can spot small boats “seven or eight miles out” and“even in haze,” said Gunners Mate Second Class Adam Waddell. He can fire the gun, effective to as much as 2,700 yards, by pressing a button on his joystick.

“It’s a very efficient, very accurate weapon,” Waddell said. He spoke as the Ponce was located about 80 miles from the Iranian coast and 280 miles north of the Strait of Hormuz.

The new weapons and sensors are in addition to other steps the U.S. has taken this year to improve naval capabilities in the Gulf.

This includes doubling to eight the number of Avenger-class mine hunting vessels. One of the newly deployed Avenger vessels, the USS Warrior, is taking part in the exercise.

The Navy has also installed on the USS Dwight D. Eisenhower aircraft carrier that’s now in the Gulf a long-range, day-night camera system called the “Stalker.”.....

http://www.bloomberg.com/news/2012-09-23/upgrades-boost-u-s-naval-capabi...

BERLIN (Reuters) - Euro zone states are preparing to allow the bloc's permanent bailout fund to leverage its capital in the same way as its predecessor so it can reach a capacity of more than 2 trillion euros and rescue big countries if necessary, Der Spiegel said on Sunday.

The weekly news magazine said that the European Stability Mechanism (ESM) would have two instruments like its predecessor, the European Financial Stability Facility (EFSF), that would only allow public money to be used for particularly risky transactions such as buying Spanish bonds, while private investors would provide the rest.

It had always been expected that the ESM, which is expected to come into force on October 8 with a capacity of 500 billion euros, would have the same leverage ability as the EFSF and euro zone finance ministers reiterated this at their meeting in Cyprus earlier this month.

If the ESM gets approval to use the same leverage techniques as the EFSF, it would have a lending power of around 2 trillion euros without countries having to contribute any more capital to the fund.

But these leverage options have not been approved by all euro zone member states and Finland is especially reluctant to agree to them.

German Finance Minister Wolfgang Schaeuble supports the plan but Finland is preventing the Eurogroup from passing it quickly, the report said.

A spokeswoman for the German finance ministry confirmed that following the German Constitutional Court's ruling on the ESM, the guidelines in Europe were being reworked and that part of this would be covered by the ESM while the rest would come from private investors, which would be a kind of leverage.

This part was in the process of being approved in Brussels, she said.

The spokeswoman said that the ESM would have the same tools as the EFSF.

She also said that German liability remained capped at 190 billion euros and added that when work had been completed at an EU level, the result would be presented to the German Bundestag lower house of parliament for approval.

The figure of 2 trillion euros was, however, incomprehensible, she said....

http://www.reuters.com/article/2012/09/23/us-eurozone-bailout-fund-idUSBRE88M0BH20120923

China’s top security official made a surprise four-hour visit to Afghanistan, the first by a ranking Chinese political figure since 1966, the state-run Xinhua News Agency reported.

Zhou Yongkang, one of the nine members in the Standing Committee of the Politburo, met with Afghan President Hamid Karzai Sept. 22 and said China “will actively participate in Afghanistan’s reconstruction,” Xinhua reported yesterday. Zhou’s visit wasn’t made public in advance because of security concerns, Xinhua said.

“Zhou’s visit shows China is seriously planning its Afghan strategy for the days after 2014,” said Wang Lian, a professor with the School of International Studies at the Peking University in Beijing. “Almost every great power in history, when they were rising, was deeply involved in Afghanistan, and China will not be an exception.”

The trip comes at a time when U.S.-led NATO forces are leaving Afghanistan after more than a decade of war. U.S. Defense Secretary Leon Panetta said on Sept. 21 in New Zealandthat the U.S. has withdrawn the last of 33,000 so-called“surge” troops from the country. All combating NATO forces are scheduled to leave Afghanistan by the end of 2014.

Zhou, who is in charge of China’s police and judicial systems, oversees crackdowns on religious extremism and terrorism in China’s northwestern Muslim region.

China Stability

The biggest pursuit of China’s Afghanistan policy is to maintain stability within its own borders, said Peking University’s Wang, who studies geo-politics in the Pakistan-Afghanistan region....

http://www.bloomberg.com/news/2012-09-23/china-s-security-chief-makes-su...