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General outlook.

TREASURIES: U.S. Treasury futures are at an impasse as traders wait on more economic data to give them a better barometer of the U.S. economy.

Data since the Fed cut short-term interest rates suggests economic conditions may not be as bad as doom-and-gloomers feared. But there hasn't been nearly enough supportive data yet to signal the economy is out of the woods. As a result, Treasury futures are in a holding pattern as they wait to see if economic conditions improve or if the Fed will be forced to ease interest rates further in hopes of jump starting the economy.

History indicates a one-time cut in interest rates in not enough to be a cure-all for the economy. But the most hawkish traders say the 50-basis-point cut Sept. 18 was enough to buy the Fed time before making another cut.

Fed funds futures still signal strong odds the Fed will cut interest rates again Oct. 31. But odds have come down considerably since late September.

Weekly Yield on a 10-year U.S. Note

Short-term trend is choppy to lower.

Tough resistance is at 5.469%.

The 2007 low of 4.568% is initial support, followed by the 2005 low of 4.241%.
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Publication:Pro Farmer
Date:Oct 6, 2007
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