Dedham Condominiums

U.S. Treasury securities prices jumped again Wednesday, while equities gave up early firmness to finish range-bound trading mixed. The second consecutive day of strong gains in Treasury prices, which move opposite of yields, meant lenders could continue to adjust rates slightly lower on many key mortgage products.

The yield on the benchmark 10-year Treasury note fell below the key 4.00-percent level by Wednesday afternoon, returning to levels last seen on June 9. The continued price advance in Treasuries was prompted largely by growing speculation the Federal Reserve might be near the end of its year-long tightening cycle and could begin to loosen credit by yearend.

The perception that the Fed might stop raising rates soon had gained credence on Tuesday, when Treasury prices rallied after PIMCO bond fund manager Bill Gross told an investment conference in Chicago that he expects the Fed may stop hiking interest rates this summer and could start to lower rates again soon.

Focus on FOMC Next Week

Indeed, the dearth of solid economic reports on Wednesday left the market's focus still riveted on the June 29-30 Federal Open Market Committee meeting. Market pundits still widely expect the central bank to raise the Fed funds target to 3.25 percent, which would make it the ninth quarter-point rate hike since the tightening cycle began last June.

Firmness Wednesday in the dollar versus the Euro and yen on signs official interest rates overseas also might be headed lower, plus some backfilling in crude oil's recent rally, also bolstered the Treasury market's price advance.

In stocks, key indexes began higher but whittled gains as Treasuries advanced, and equities returned to barely mixed and little-changed levels by the day's closing bell. The NASDAQ Composite index backed away from the 2,100 level last surmounted in February, while the Dow 30 Industrial Index proved unable to cling above 10,600, failures that may have added technical and psychological pressure as well.

Featured stocks on Wednesday included one of the NYSE's most-active issues, Ford Motor Co. Ford shares shed $0.49 or about 4.4 percent after the beleaguered automaker late on Tuesday revised its 2005 profit outlook for the second time in as many months. Ford also said it would cut some 1,700 jobs as it grapples with soggy U.S. vehicle sales. Ford shares closed at $10.68.

Another mover was TD Waterhouse, whose stock rallied more than 20 percent after news that rival online broker Ameritrade Holding Corp. would buy it in a $2.9 billion all-stock deal from Toronto-Dominion Bank of Canada. Ameritrade recently had continually rebuffed merger overtures another online discount stock brokerage, E*Trade Financial Corp.

Electronics manufacturers' stocks gained ground after Jabil Circuit Inc. raised its outlook, which hoisted Jabil shares more than $3.00 higher and spread to rivals in the sector.

At Closing: The Dow 30 Industrial Index fell 11.74 points or 0.11 percent to end at 10,587.93; the Nasdaq Composite index gained 0.96 point or 0.05 percent to close at 2,092.03, and the benchmark Standard & Poor's 500 Index firmed 0.27 point or 0.02 percent to end at 1,213.88.

The 30-year Treasury bond was up 1-15/32 in price with the yield falling to 4.23 percent versus 4.32 percent at Tuesday's close.

The 10-year Treasury note was up 26/32 in price with the yield falling to 3.93 percent from 4.03 percent closing on Tuesday.

The 5-year Treasury note was up 16/32 in price with the yield falling to 3.71 percent from 3.82 percent closing on Tuesday.

AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year Conventional Fixed-Rate Mortgage was at 5.404 from 5.43 percent at Tuesday's close.

The 15-year Conventional Fixed-Rate Mortgage was at 5.001 versus 5.027 percent at Tuesday's close.

Coming Up:

On Thursday, jobless claims for the week ended June 18 are expected to drop to 330,000 from the prior week's 333,000 level. May existing home sales are foreacast slipping to 7.15 million unit rate from the previous 7.18 million. Neither report is likely to sway the market markedly, given the preoccupation with the Fed meeting next week. That said, Fed Chairman Alan Greenspan is slated to speak to a Senate Finance committee on Thursday about China's fixed exchange rate, a thorny issue for U.S. markets and traders. Overnight, however, lenders might see enough room to continue nudging rates lower for key mortgage products.

Laura Jacobsljacobs@interest.com

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