OUTLOOK

"Treasuries Rally as Forecasted"

7/20/2007

In our Outlook on 6/19/07, we stated, "We believe that US Treasuries are due for a rebound rally."  Within 8 weeks, we forecasted the yield on the 10-Year Treasury Note (TNX) to break below 5% after reaching a high of 5.32% on 6/13/07.

Our forecast was correct.  On 7/20/07, the yield on the 10-Year Treasury Note (TNX) broke below 5%, reaching as low as 4.931% to close at 4.956%.  Based on our Bullish forecast on Treasuries, our trade achieved a profit of 3.01% in one month.

Mark Yuan, CFA