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Treasury Secretary Timothy F. Geithner will urge China to allow higher interest rates when he meets with Chinese leaders this week, as the U.S. extends its push for a stronger yuan.

Geithner will say China should relax controls on the financial system and give foreign banks and insurers more access, said David Loevinger, the Treasury Department’s senior coordinator for China. Officials from both nations are meeting in Washington today and tomorrow as part of the annual Strategic and Economic Dialogue.

U.S. officials argue that a yuan kept artificially cheap to help exporters also makes it harder for China to lift interest rates and curb an inflation rate that hit a 32-month high in March. China, led at the talks by Vice Premier Wang Qishan, blames record U.S. budget deficits for contributing to lopsided flows of trade and investment.

“It’s pretty clear that the current system is hurting them in their inflation fight,” said Dan Dorrow, head of research at Faros Trading LLC, a currency trading firm in Stamford, Connecticut. “The reason for that is the improperly priced exchange rate.”

The yuan was little changed at 6.4939 per dollar as of the 4:30 p.m. close in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.4892 on April 29, the strongest level since 1993.

Domestic Demand

As the talks opened today, Geithner called on China to shift its economy toward domestic demand and said the goals of the two nations are “not in conflict.” Wang acknowledged that there are some “clashes” in U.S.-China economic ties, while also emphasizing the “shared aspirations” between the two countries.

Senators Charles Schumer of New York and Jeff Merkley of Oregon called May 6 for a “rebalancing” in the U.S.-China economic relationship. The two lawmakers, who just returned from a trip to China, said the Chinese need to open their financial sector, address “abnormally low deposit and lending rates” and allow broader market access to foreign firms.

Chinese production and U.S. consumption shouldn’t be such dominating themes, the two Democrats said. “This situation is not sustainable and harms nearly all involved,” they wrote in a letter to Geithner.

China has raised interest rates four times since mid- October and lenders’ reserve requirement seven times. The benchmark one-year lending rate increased 0.25 percentage point to 6.31 percent on April 5. The one-year deposit rate stands at 3.25 percent.

Inflation Eases

The median forecast of 30 economists surveyed by Bloomberg News is for an annual inflation rate in April of 5.2 percent, down from 5.4 percent in March.

Vice Finance Minister Zhu Guangyao said on May 6 that China is paying “close attention” to U.S. efforts to reduce its budget deficit, and his country will focus on improving the quality of its exchange-rate mechanism.

China says a loose monetary policy in the U.S. has helped lower the value of the dollar, stoking global inflation in food and energy. A commentary today by the official Xinhua News Agency said the “plunging” dollar “has become the source of many current global economic problems.”

China held $1.15 trillion in Treasuries at the end of February, more than any other country. The U.S. trade deficit with China came to $18.8 billion in February.

Top Officials

Geithner and Wang will meet alongside Secretary of State Hillary Clinton and State Councilor Dai Bingguo at this week’s meetings, which will draw about 30 top Chinese officials.

The Obama administration and U.S. lawmakers say China’s currency policy gives the nation’s exporters an unfair competitive advantage, costing American jobs. Geithner is trying to convince Chinese officials that a stronger yuan has benefits for their economy.

Geithner said last week that allowing the yuan to rise and making the financial system less dependent on government- controlled interest rates would give Chinese leaders an “enhanced” ability to damp inflation.

The Treasury argues that higher interest rates on deposits will also encourage consumer spending in China, another way to reduce imbalances.

“We’re going to encourage China to move more quickly in lifting the ceiling on interest rates on bank deposits in order to put more money into Chinese consumers’ pockets,” Loevinger said at a briefing last week in Washington.

Limited Gains

Investors are betting the yuan’s rise may be limited over the next 12 months. Twelve-month non-deliverable yuan forwards dropped 0.81 percent last week to 6.3520 per dollar on May 6, their biggest weekly loss of the year, on speculation that China won’t allow faster appreciation to reduce inflation.

John Frisbie, president of the U.S.-China Business Council, said support for a stronger yuan among Chinese leaders has increased in the past year.

“The strong hand has switched over to those who are saying that the exchange rate can help us fight inflation,” Frisbie said in a telephone interview. He said his group, whose members include companies such as Apple Inc. (AAPL), JPMorgan Chase & Co. (JPM) and Coca-Cola Co. (KO), wants China to resume opening its financial services sector to allow more foreign investment.

Foreign lenders’ market share in China has dropped since the government first opened the industry in December 2006. Banks such as New York-based Citigroup Inc. (C) and London-based HSBC Holdings Plc (HSBA) want to tap household and corporate savings that reached $10 trillion in January as China overtook Japan to become the world’s second-biggest economy.

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Japan’s prime minister has told a utility to halt three reactors in central Japan because of safety concerns in the event of a major earthquake.

Prime Minister Naoto Kan told a news conference Friday his government asked operator Chubu Electric Power Co. to suspend two running reactors and a third shut for a regular inspection at its Hamaoka nuclear plant.

Kan cited experts’ forecast of a 90 percent probability of a major quake striking the region within 30 years no faxing 1 hour payday loans.

He said it was a safety measure after the crisis at the Fukushima Dai-ichi nuclear plant, which was crippled by an earthquake and tsunami March 11.

Residents have long demanded suspension of the Hamaoka reactors.

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A pair of foreclosed properties on the southern edge of the Union Station shopping and hotel complex are headed for auction later this month.

The Power House Office Building and Theatre, at 401 South 18th Street; and the Grand Central Office Building, at 415 South 18th Street, will go on the block Tuesday.

Both buildings are at the foot of the 18th Street bridge.

Bidding is scheduled to last two days.

Auction.com, the auctioneer, said bids for each property will begin at $400,000.

The Power House building, originally valued at $7.5 million, also includes a one-story movie theater.

Built in 1904 to supply power for the adjacent rail depot, the 112,281-square-foot structure currently has an occupancy rate of 77 percent.

Its tenants include radio studios, an architectural firm and a marketing agency.

The Grand Central building, at 65,852 square feet, was originally valued at $8.7 million. It houses a government office, trade association and legal counsel.

Real estate records show the owner of the buildings, St. Louis Station Partners, defaulted on loans of $5.78 million on Grand Central and $4.65 million on the Power House in 2008.

The office spaces now operate under a holding company controlled by the lender, JP Morgan Chase.

Interested parties can register to bid on the properties at auction.com.

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Investors are paying the smallest discounts for Treasuries other than the newest, most-traded bonds since the start of the financial crisis, a sign of growing demand even as the Federal Reserve’s $600 billion buying program approaches its conclusion.

Yields on older notes with 10 years left to maturity have fallen to within 11.4 basis points, or 0.114 percentage point, of those on the newest securities of the same maturity, down from the peak of 66.1 in January 2009, according to data from Barclays Plc. The gap for so-called off-the-run notes narrowed to as little as 6.6 basis points in February, the least since May 2007.

While investors typically pay the most for benchmark Treasuries, the shrinking gap suggests that U.S. borrowing costs are unlikely to soar when the central bank’s second round of so- called quantitative easing ends in June. The Barclays data show that the spread in yields is less now than in the five years before the credit crisis began in 2007.

“There will not be major disruptions in the functioning of the Treasury market,” said Eric Pellicciaro, the New York-based head of global rates investments at BlackRock Inc., which manages about $3.56 trillion in assets. Participation in the Treasury market will “remain high, if not higher,” he said.

No Concern

Goldman Sachs Group Inc. economists said last week they don’t expect an increase in yields after the Fed exits the market, while Credit Suisse AG fixed-income strategists said Treasury rates may fall as traders reverse bets on a decline.

“We are not concerned about the end of QE2,” the Credit Suisse strategists led by Carl Lantz in New York wrote in the report. “Our base case is that rates will tend to rally around the end of the program.”

Treasuries gained last week, with the yield on the benchmark 10-year note falling 17 basis points, or 0.17 percentage point, to 3.41 percent, according to Bloomberg Bond Trader prices. The decline was the biggest since yields fell by the same amount in the five days ended Feb. 25. The price of the 3.625 percent security due February 2021 rose 1 13/32, or $14.06 per $1,000 face amount, to 101 25/32.

The rate was little changed today at 3.42 percent as of 6:02 a.m. in London.

The yield on the 9.875 percent note sold in November 1985 and due in November 2015 is 16 basis points less than the benchmark 1.37 percent security issued in November 2010 and maturing in five years.

Bond Bears

The Fed said Nov. 3 it would buy $600 billion of Treasuries in an effort to spur the sluggish labor market and prevent deflation to boost the economy. Since then, Labor Department data show the U.S. has created 723,000 jobs, inflation expectations as measured by debt yields have increased and markets from stocks to junks bonds have surged.

Bond bears say the only thing supporting the Treasury market is investors seeking safety amid turmoil and uprisings in the Middle East in North Africa, the nuclear disaster in Japan following a record earthquake and tsunami, and Europe’s sovereign-debt crisis.

Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, has a net short position in Treasuries, or a bet pieces will fall, according to the firm’s website. The founder of Newport Beach, California-based Pimco has eliminated Treasuries from his $236 billion Total Return Fund, saying they offer little value because of the growing U no fax payday advances.S. debt burden and the risk of accelerating inflation.

Rate ‘Pressure’

“There’s going to be roughly $75 billion a month of issuance that’s going to have to be absorbed by the market,” said David Glocke, a fund manager who oversees $65 billion of Treasuries at Vanguard Group Inc. in Valley Forge, Pennsylvania. “That should go ahead and cause some pressure on interest rates to go up.”

Ten-year yields are down from 3.8 percent a year ago and remain below the average of 5.22 percent over the last two decades even with the U.S. projected to post a deficit in excess of $1 trillion for a third-consecutive year. Yields will remain below 4 percent through year-end, according to the median forecast of 73 economists in a Bloomberg News survey.

A narrowing in the difference in yields between on- and off-the-run Treasuries comes as the Fed shifts its buying to newer issues, which account for about 90 percent of trading in U.S. government securities. More than 36 percent of the government bonds the central bank bought in March were issued within the previous 90 days, up from 15 percent in November, according to Bank of America Merrill Lynch.

Rising Volume

In another sign of demand, the volume of Treasury trading now exceeds levels before the collapse of Lehman Brothers Holdings Inc. in September 2008, according to Fed data.

Primary dealers have traded an average of $606 billion in securities each week this year, compared with $584 billion in the first eight months of 2008, central bank data shows. The amount dipped to about $410 billion per week in 2009 and $524 billion last year even as debt outstanding surged 54 percent $8.86 trillion.

Treasuries are also getting a boost from optimism that President Barack Obama and Congress are beginning to address record debt levels, according to Brian Edmonds, head of interest rates at primary dealer Cantor Fitzgerald LP in New York.

Obama, a Democrat, unveiled a plan on April 13 to cut $4 trillion in cumulative deficits within 12 years through a combination of spending cuts and tax increases. The U.S. House passed a Republican budget on April 15 that would cut spending by more than $6 trillion over a decade.

Auction Demand

“We’re starting to have a meaningful dialogue that discusses these formerly untouchable things,” Edmonds said.

Demand at Treasury auctions has risen to record levels this year, with investors submitting $3 in orders for every $1 of debt offered, data compiled by Bloomberg show. At each of last week’s auctions of three-, 10- and 30-year bonds, the so-called bid-to-cover ratio exceeded the average of the previous 10 sales.

The bond market has likely already priced in the end of QE2, according to Goldman Sachs, a primary dealer. Traders typically adjust prices when the Fed announces its buying plans rather than when it acquires the debt, Sven Jari Stehn, an economist at the firm in New York, wrote in the report last week.

“Many market participants are worried that the end of the Treasury purchases will have strongly adverse effects on bond yields and other asset prices,” Stehn wrote. “This is unlikely.”

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Employees of Liberty Mutual Group took heart in October when Missouri Gov. Jay Nixon announced their company would rake in $1.6 million in state tax credits

A European Union plan to partially lift a ban on passengers carrying liquids onto planes has U.S. airport officials worried that it will create a security gap and may confuse passengers traveling to the United States.

Beginning April 29, the EU plans to allow airline passengers carrying wine, perfume and other liquids purchased at duty-free shops in airports outside Europe to take those items into airline cabins with them when they catch connecting flights at about two dozen European airports.

That means, for example, that travelers flying from Asia and Africa to European airports to connect to flights to the United States can keep liquids, aerosols and gels purchased in airport duty-free shops in their carry-on bags the entire way. The items will be screened at European airports before passengers board connecting flights.

Christopher Bidwell, Airports Council International-North America’s vice president for security and facilitation, said the effectiveness of the technologies European airports will use to screen liquids for explosives is unclear. There are several new technologies that European airports plan to use, he said, but none have undergone real world testing, only laboratory tests.

The Transportation Security Administration hasn’t said whether passengers arriving in the U.S. from Europe with liquids purchased outside the EU will be allowed to board domestic flights with those items, but that appears unlikely, Bidwell said in an interview on Friday unsecured personal loans.

He said he’s concerned passengers will become frustrated or angry if they’ve carried expensive items on board multiple flights for thousands of miles only to be told they have to dump them in order to board a domestic flight to reach their final destination.

“This issue points to why we have to focus on making aviation security more efficient,” said Geoff Freeman, executive vice president of the U.S. Travel Association, which represents hotels, restaurants and other businesses catering to travelers. “Traveling has become too much of a hassle, and that’s hampering our economic recovery.”

EU airports and some European airlines have also expressed concern about the plan.

TSA spokesman Nick Kimball provided a statement that said the agency is working with the EU on security matters. He declined to answer further questions.

Victoria Day, a spokeswoman for the Air Transport Association, which represents major U.S. airlines, said it hopes Europe and the U.S. will “harmonize requirements to appropriately accommodate security and passenger-processing considerations.”

The United States and the European Union restricted carry-on liquids, aerosols and gels to less than three ounces in 2006 after the British authorities uncovered a plot to bomb passenger planes bound for the United States using liquid explosives.

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America’s chief tax man was in nice-guy mode today, promising to loosen the screws on delinguent taxpayers.

IRS Commissioner Doug Shulman said the IRS will let taxpayers run up bigger tax bills before filing tax liens against their property.  More taxpayers will also be eligible for a the IRS “offers in compromise” program, in which the IRS sometimes settles for less than the taxpayer owes.

“I always encourage employees of the IRS to try to walk in the taxpayers’ shoes,” Schulman told reporters in a teleconference today.  He said the changes will help taxpayers get a “fresh start.”

Under the new guidelines, the IRS will usually not file tax liens until delinquent debt tops $10,000, up from $5,000 presently.

The tax collectors will also generally withdraw liens when taxpayers agree to a direct-debit intallment agreement with debts of $25,000 or less.  

A tax lien is a government claim against the taxpayer’s property.  It can effect credit reports, hurting a taxpayer’s ability to obtain loans and find jobs.

Taxpayers with incomes up to $100,000 will be allowed to submit offers in compromise.  The program will admit people who owe up to $50,000, up from the current $25,000 limit.

The IRS sometimes agrees to settle for lesser payments “once we determine that you can’t pay now and there is no prospect of you paying it in the future,” Shulman said.

Small businesses owing $25,000 or less can enter into installment payment agreements, up from the previous $10,000 limit.

Shulman said the changes will probably make no difference in the amount of taxes the government collects but might increase collections.

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President Obama on Monday will propose a 2012 federal budget that the White House says will cut deficits by $1.1 trillion over 10 years.

The president’s request calls for a mix of strategic spending to boost U.S. competitiveness and selective belt-tightening intended as a "down payment" on serious deficit reduction, according to his budget director Jacob Lew, who spoke on CNN’s "State of the Union."

Full details on the budget will be released on Monday morning.

So it’s not clear yet where all of the estimated $1.1 trillion in deficit reduction will come from, or exactly how significant a swipe it makes at long-term deficit reduction.

But one chunk — $400 billion in savings — would result from the president’s call for a five-year freeze on non-security discretionary spending.

Non-security discretionary spending only makes up about 10% of all federal spending. Deficit hawks lament that both the White House and Republicans have focused all of their attention in this area rather than address the country’s big debt drivers — spending on the entitlement programs and defense.

Nevertheless, this piece of the president’s budget is certain to generate some of the biggest outcry since it includes cuts to programs that Democrats fiercely defend, such as heating assistance to low-income people.

Lew said it was a "very difficult" budget. "We have to make tough trade-offs."

Even where the president will propose investments in areas he deems important, such as education, there would also be cutbacks, Lew said.

For instance, Obama’s budget will boost the Pell Grant program to ensure that 9 million students will be able to afford college, Lew said. But to pay for those proposals, Obama will call for eliminating the grants for summer school and limit their use to the regular school year.

He will also propose that interest on federal loans for graduate students accrue during school; currently, the interest tab doesn’t start running until after graduation.

The changes would save $9 billion in the first year, Lew told CNN’s Candy Crowley.

Lew defended the administration from turning its back on its own fiscal commission, which in December proposed $4 trillion in cuts. He listed three items that will appear in the budget that echo recommendations from the commission: a call for corporate tax reform, changes to rein in malpractice lawsuits against doctors and a freeze in pay on federal workers.

Nevertheless, such proposals will not save a significant amount of money relative to the deficits set to accrue. And from all indications, the president’s budget will not address key elements needed to control long-term spending in the major entitlement programs: Medicare, Medicaid and Social Security.

Obama’s budget request is essentially a blueprint of his fiscal policy priorities — the programs he would like to fund or cut, the new investments he would make and how he would pay for it all.

Congress can accept, reject or modify the president’s budget. And Republicans may well reject much of it out of hand, since its cuts are not nearly as deep as many conservatives have been demanding.

Obama’s proposal is only the first step in a convoluted process that involves no less than 40 congressional committees, 24 subcommittees, countless hearings and a number of floor votes in the House and Senate.

If all goes well, a formal federal budget for government agencies will be in place by Oct. 1, the start of the 2012 fiscal year. Because Congress never passed a budget for fiscal year 2011, the government has been running on funding from a so-called continuing resolution, which expires on March 4. 

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Greece’s economy has been rescued from the “abyss” as austerity measures aimed at restoring order to public finances “are being implemented as planned,” the European Union and International Monetary Fund said.

“While there have been some delays and shortfalls, it should not undermine the fact that the program is broadly on track,” Poul Thomsen, head of the IMF’s Greece mission, told a news conference in Athens today. “We are ready for the second phase of the program, having successfully pulled the economy from an abyss.”

Greece’s fiscal health still requires a “broad base of structural reforms” to underpin a sustainable recovery, he said. The second phase will focus on a tax overhaul and state- asset sales that may raise as much as 50 billion euros ($68 billion) by 2015 to pay down debt, while further salary cuts and levy increases have been ruled out for the medium term, Servaas Deroose, a European Commission economist, told the briefing.

Thomsen and Deroose were in Athens for a quarterly review of Greece’s progress under a 110 billion-euro EU-IMF bailout it received last May to avert default. Approval of Greece’s efforts will ensure payment of the plan’s next installment of 15 billion euros in March. Deroose said he’s “confident” the funds will be disbursed.

Shares Advance

Shares in state-controlled banks shot up after the remarks by Deroose, who said an estimated 15 billion euros may be raised in 2011 and 2012 by selling commercial real estate and stakes in companies, both listed and unlisted. Hellenic Postbank SA gained 10.5 percent, Attica Bank SA rose 9.7 percent and Agricultural Bank of Greece SA added 13.2 percent at 4:45 p.m. in Athens. The government will complete the sale of the 110-year-old Postbank in 2011, according to a commission report released in December pay day advance.

Greece has vowed to trim the budget gap to 7.4 percent of gross domestic product in 2011 from 9.4 percent in 2010. The EU and the IMF said today the 2010 deficit was about 9.5 percent. Fallout from Greece’s crisis led to a surge in bond yields of distressed euro-area nations as investors shunned their debt.

The yield on Greece’s 10-year bond remained at a euro-area high of 11.15 percent today. The extra yield that investors demand to hold the 10-year security instead of German bunds was at 824 basis points compared with 811 basis points yesterday and a record 973.6 basis points on Jan. 7.

Austerity Moves

Prime Minister George Papandreou’s wage and pension cuts and sales-tax increases in return for the emergency loans from the EU and the IMF have contributed to a slump in demand, with Greece’s economy shrinking an estimated 4.2 percent last year. EU and IMF officials today stuck to forecasts for a 3 percent contraction this year.

Finance Minister George Papaconstantinou said earlier this month he was confident a comprehensive package from the EU would stem borrowing costs and allow Greece to return to international markets for financing this year. The country is banking on lower lending rates on the EU-IMF loans, as well as an extension of the maturities, to help assuage market fears of a Greek default.

Greece may return to markets no later than early next year, Thomsen said today, adding that external conditions aren’t “as favorable as expected.”

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Job openings in the U.S. decreased in December to the lowest level in three months, signaling a sustained labor-market recovery will take time to develop.

The number of positions waiting to be filled fell by 139,000 to 3.06 million, the fewest since September, the Labor Department said today in Washington. The number of people hired also dropped, as did the number of workers fired.

Employers added a fewer-than-forecast 36,000 jobs in January while the unemployment rate unexpectedly fell to 9 percent, the lowest level since April 2009, the Labor Department reported last week. Growth in the world’s largest economy will need to accelerate to make up for the almost 9 million jobs lost in the recent recession.

“We’re just digging ourselves out of a real big hole, and it’s going to take time,” Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. “The labor market is recovering gradually. The unemployment rate will slowly grind lower.”

Job openings decreased 4.3 percent in December, the biggest drop since May, from a revised 3.2 million in the prior month, the Labor Department report showed.

The decline was led by a 100,000 drop among professional and business services, which include accountants, computer systems experts and temporary-help agencies. Construction firms followed with 63,000 fewer openings in December.

Government agencies showed the biggest increase in help wanted, which climbed by 114,000.

Vying for Jobs

Compared with the 14.5 million Americans who were unemployed in December, today’s figures indicate there were 4.7 people vying for every opening, up from about 1.8 when the recession began in December 2007. The number of jobless fell to 13.9 million last month, pushing the unemployment rate down, the Labor Department reported Feb. 4.

Today’s report helps shed light on the dynamics behind the monthly employment figures. Private payrolls, which exclude government positions, rose by 50,000 workers in January, the Labor Department figures showed last week.

Employers took on 4.18 million workers in December, down 30,000 from the previous month, according to today’s report guaranteed pay day loans. Total firings, which exclude retirements and those who left their jobs voluntarily, decreased to 1.84 million from 1.85 million a month before.

An increase in the number of people voluntarily leaving jobs may be one sign Americans feel more confident about finding other work. About 1.99 million people quit their jobs in December, representing 48 percent of all separations. That was up from 1.75 million, or 42 percent, in December 2009.

Job Churning

In the 12 months ended in December, the economy created a net 900,000 jobs, representing about 51 million hires compared with about 50.1 million separations, today’s report showed.

Federal Reserve Chairman Ben S. Bernanke on Feb. 3 said the U.S. needs to see faster job growth for a sufficient time before policy makers can be assured the economic recovery has taken hold.

“With output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” Bernanke said in a speech at the National Press Club in Washington. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.”

Fed policy makers have signaled they will stick to their plan to keep buying as much as $600 billion in debt through June to spur growth.

Sales Positions

Lowe’s Cos., the second-biggest U.S. home-improvement retailer, plans to add 8,000 to 10,000 weekend sales positions to improve staffing at the busiest time of the week. The Mooresville, North Carolina-based chain also will cut 1,700 middle-management jobs as profit growth trails that of larger rival Home Depot Inc.

The two largest U.S. automakers are expanding. Ford Motor Corp., based in Dearborn, Michigan, plans to hire more than 7,000 workers in the next two years. Larger rival General Motors Co., based in Detroit, will add a third shift and about 750 jobs to its assembly plant in Flint, Michigan.

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