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Speaking to the Senate Banking Committee as part of the Humphrey- Hawkins testimony, Treasury Secretary Henry Paulson said government-sponsored enterprises (GSEs) need a strong regulator.

"Market stability and support for housing finance are among my highest priorities during this time of stress in our markets. Therefore, after consultations with the Federal Reserve, the Office of Federal Housing Enterprise Oversight (OFHEO), the Securities and Exchange Commission (SEC) and Congressional leaders, we are asking Congress, as it completes its work on a stronger GSE regulatory structure, to also enact a three- part plan to address the current situation," Paulson said.

In a question and answer session with the Senate Banking Committee at the Humphrey-Hawkins testimony, Federal Reserve Chairman Ben Bernanke said the central issue in the U.S. economy is the housing market.

Appearing before the Senate Banking Committee at the semiannual Humphrey-Hawkins testimony on Tuesday, Federal Reserve Chairman Ben Bernanke said the economy is facing numerous difficulties.

"The U.S. economy and financial system have confronted some significant challenges thus far in 2008.The contraction in housing activity that began in 2006 and the associated deterioration in mortgage markets that became...

Economists say the main story in June's producer price index is that core prices, which exclude food and energy, remain contained despite soaring costs from energy driving up the headline index.

The U.S. Labor Department's seasonally adjusted core measure of producer prices rose by 0.2% in June, lower than the consensus forecast, but total prices moved up 1.8%, four-tenths higher than consensus.

The U.S. Labor Department's seasonally-adjusted core measure of producer price inflation grew at 0.2% month-over-month in June, the same pace as the previous month, while the headline measure moved up by 1.8%, four-tenths higher than consensus.

From a year ago, the core measure of producer price inflation was up 3.0%, two-tenths lower than expectations and the same pace as...

A hawkish testimony and mostly unchanged rhetoric are expected from Fed Chairman Ben Bernanke on Tuesday, as the head of the U.S. central bank delivers the first of a two-day semiannual testimony to congress.

"In the US, all eyes will be on Ben Bernanke as he appears before Congress on Tuesday to give his semi-annual Humphrey-Hawkins testimony," said CIBC Economist Meny Grauman...

The Bank of Canada's rate decision and semi-annual testimony from Fed Chairman Ben Bernanke are the main events of what is looking to be an action-packed Tuesday. Markets will also be treated to the Canadian new motor vehicle sales, U.S. PPI and the Empire Fed's manufacturing index.

Brian Bethune, chief U.S. financial economist at Global Insight, said "Bold, creative, aggressive policy action is needed for the GSEs to survive in their current capacity as private entities, and it is needed now."

He called the capitalization-crisis of Fannie Mae and Freddie Mac a "potentially dangerous turn of events in the current U.S. business cycle" that must be "defused swiftly and effectively, because failure to do so would risk a further meltdown of the housing and mortgage markets of proportions not seen since the depression era."

A hawkish testimony and mostly unchanged rhetoric are expected from Fed Chairman Ben Bernanke on Tuesday, as the head of the U.S. central bank delivers the first of a two-day semiannual testimony to congress.

"In the US, all eyes will be on Ben Bernanke as he appears before Congress on Tuesday to give his semi-annual Humphrey-Hawkins testimony," said CIBC Economist Meny Grauman...