Market Update 5/2/2008

By
Mortgage and Lending with CYPRESS MORTGAGE

Treasuries headed for a weekly gain on speculation a U.S. government report will

show the economy lost jobs for a fourth straight month, making it more likely the

Federal Reserve will continue cutting borrowing costs. Ten-year notes are headed for

the first weekly advance since the end of March. The price of the 2 1/8 percent security

due in April 2010 rose 1/32, or 31 cents per $1,000 face amount, to 99 18/32. The

yield has fallen 7 basis points so far this week, the most since the week ended April

11. The rate on the 10-year note was little changed at 3.76 percent. It fell 12 basis

points this week, the first decline since the period ended March 21. Two-year yields

were 1.41 percentage points less than their 10-year counterparts. The difference

narrowed to 1.39 percentage points yesterday, the least since January. The flattening

of the so-called yield curve indicates traders are paring bets on additional rate

reductions by the central bank. The market is unchanged to .125 worse in discount this

morning.

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