Daily Market Update 5/22/09

Interest rates rose Friday following a late sell-off in Treasurys and mortgage-backed securities (MBS) Thursday. Treasurys have been hit especially hard this week, with the yield on the 10-year note reaching 3.4% this morning, the highest level since November 19. Yesterday the Treasury announced plans to auction $101 billion in 2-, 5-, and 7-year notes next week, in addition to $61 billion in 6-week and 3-month notes. The extraordinarily large auctions are needed to finance this year's projected federal budget deficit of $1.84 trillion. Rates have risen as investors have become increasingly concerned about the high level of government debt. MBS markets have out-performed Treasurys, but mortgage rates inched higher for the week. The dollar fell against most major currencies. Stocks were mixed. The market will close today at 2:00 PM and will not reopen until Tuesday.