Elsewhere in credit markets, a gauge of U.S. corporate credit risk fell even as consumer confidence dropped this month and industrial production remained unchanged.

The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, decreased 0.5 basis point to a mid-price of 81.7 basis points at 12:30 p.m. in New York, according to prices compiled by Bloomberg. The index has fallen from a two month closing high of 87.5 basis points on June 12.

Investors are trying to gauge when the Federal Reserve will scale back its $85 billion monthly bond purchases, known as quantitative easing. Fed Chairman Ben S. Bernanke will announce the central bank’s policy on June 19 after the two-day Federal Open Market Committee meeting.the cost of protecting corporate bonds from default in the U.S. fell from a two-month high.

Morgan Stanley Bonds

The credit-swaps index typically falls as investor confidence improves and rises as it deteriorates. The contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

Bonds of Morgan Stanley were the most actively traded dollar-denominated corporate securities by dealers today, accounting for 4.2 percent of the volume of dealer trades of $1 million or more, according to data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The U.S. two-year interest-rate swap spread, a measure of debt market stress, fell 0.14 basis point to 15.91 basis points. The gauge narrows when investors favor assets such as company debentures and widens when they seek the perceived safety of government securities.

Limited Losses

Funds that purchase loans have seen deposits of $28.5 billion, a 38 percent increase in total assets since the start of the year, according to a report from Bank of America Corp. dated June 6.

Losses on second-lien loans have been limited as returns on junk bonds plummeted following Bernanke’s May 22 testimony to the Joint Economic Committee of Congress in Washington. The Fed could slow the pace of its $85 billion of bond purchases in its “next few meetings,” Bernanke said in the testimony.