Sentiment improves among U.S. homebuilders

Homebuilders’ confidence in the United States climbed in August to the highest level in almost a decade, while manufacturing in one region slumped.

The National Association of Home Builders/Wells Fargo sentiment gauge rose to 61, the highest since November 2005, from 60 the previous two months, figures from the Washington-based group showed Monday. Readings greater than 50 mean more respondents report good market conditions.

The Federal Reserve Bank of New York’s Empire State factory index plunged to minus 14.9 in August, the lowest level since April 2009.

A strong job market and historically low mortgage rates will probably keep boosting demand for residential real estate, ensuring home building will contribute to economic growth. Gains in construction will be needed to help make up for any slowdown in manufacturing as factories contend with a strong dollar and bloated inventories.

— Bloomberg News

Citigroup agrees to pay $180 million settlement

Citigroup agreed to pay almost $180 million to settle a U.S. regulator’s allegations that it defrauded wealthy clients of two failed hedge funds by telling them the investments were as safe as low-risk municipal bonds.

Citigroup units made false and misleading statements about the funds, which raised almost $3 billion from 2002 to 2007, the Securities and Exchange Commission said in a statement Monday. Before the funds collapsed in 2008, the bank didn’t tell most clients that an internal rating showed the investments posed significant risks to principal, and Citigroup also failed to disclose that one of the funds was seeking an emergency loan.

The funds sought to exploit differences between yields on U.S. government debt and municipal bonds and used borrowed money to amplify those bets. The New York-based bank pushed clients into the funds even into the second half of 2007 when the funds began experiencing margin calls and liquidity problems, according to the SEC.

In settling the matter, Citigroup neither admitted nor denied the SEC’s allegations.

— Bloomberg News

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