Market Update 5/15/2008

Mortgage and Lending with CYPRESS MORTGAGE

Treasuries gained after a Federal Reserve report showed New York manufacturing

unexpectedly contracted this month. The price of the 3 7/8 percent security due in May

2018 rose about 1/8, or $1.25 per $1,000 face amount, to 99 25/32. The New York

Fed's general economic index was minus 3.2 in May, after a 0.6 reading in April. The

median forecast in a Bloomberg survey was for the index to be flat. The index was

negative in February and March, signaling contraction. Initial jobless claims rose to

371,000 in the past week from 365,000 the week before, a government report showed

separately. Foreign buying of U.S. financial assets probably rose for a second month

in March, a Treasury Department report may show at 9 a.m. New York time. Output at

manufacturers, mines and utilities probably fell 0.3 percent in April after rising 0.3

percent in March, according to the median forecast in a Bloomberg News survey. The

Fed releases the report at 9:15 a.m. New York time. The market is .25 to .5 better in

discount this morning.

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