Economic Commentary - Ron Hebert

3-21-08 Interest rates for commercial mortgages fell 15 to 20 basis points as investors flocked to the safety of government debt, further depressing yields. The 10-year U.S. Treasury yield closed yesterday at 3.33 percent down 9 basis points for the week. Five-year swaps ended the week at 3.25 percent with 10-year swaps at 3.96 percent. More lenders are moving to pricing over swaps, which have mitigated sharp drops in the underlying bond yields. The Fed reduced its target rate by 1 percent, one-quarter percent less than expected, citing inflationary concerns with the result that the yield on 3-month Treasury Bills fell to its lowest level since 1954.