Market Update 7/1/2008

Mortgage and Lending with CYPRESS MORTGAGE

Treasuries advanced before a report economists forecast will show manufacturing in

the U.S. contracted in June for a fifth month, fueling speculation the Federal Reserve

may delay raising interest rates. The gain pushed the yield on two-year notes to the

lowest level in more than three weeks. The Institute for Supply Management's factory

index fell to 48.5 from 49.6 in May, according to the median estimate of 77 economists

in a Bloomberg News survey. A reading of 50 is the dividing line between expansion

and contraction. The yield on the benchmark two-year note fell 6 basis points to 2.57

percent by 8:11 a.m. in New York, according to bond broker BGCantor Market Data,

near the lowest level since June 6. The price of the 2.875 percent security due June

2010 rose 3/32 to 100 18/32. A basis point is 0.01 percentage point. The yield on 10-

year notes declined 4 basis points to 3.94 percent. Treasuries also gained as stocks in

Europe and Asia fell. The MSCI World index lost 0.7 percent in London, while futures

on the Standard & Poor's 500 Index dropped 1.1 percent. The market is relatively


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