OUTLOOK

"Bullish on Treasuries"

6/19/2007

We believe that US Treasuries are due for a rebound rally.  Within 8 weeks, we expect the yield on the 10-Year Treasury Note (TNX) to break below 5% after reaching a high of 5.32% on 6/13/07.

Given the extreme bearish sentiment in bonds and unanimous expectations of higher interest rates, we view this as a good opportunity to bet against the crowd and go long on treasuries.

Mark Yuan, CFA