Probable Rate Cut, Mortgage-Related Writedown News Sways Market

London–As the industry renewed fears about how far the credit crisis fallout would reach, European government bonds rose Monday, fueled by safe haven flows, reports.Last week’s announcements that Citigroup and Merrill Lynch are looking to raise money and would post large mortgage-related writedowns–as well as American Express’ profit warning–sparked concern in the market.Increased speculation that the U.S. Federal Reserve will cut the Federal Funds rate before its next meeting at the end of the month also boosted bonds. After chairman Ben Bernanke indicated last week that the Fed was ready to cut rates in light of ongoing economic unrest, the financial markets are anticipating a 50 basis point cut.