July 23, 2008– 9:00 a.m. Treasuries posted sizable losses Tuesday in another quiet trading session.  The summer doldrums certainly seem to have begun, and it didn’t help that the economic calendar was very quiet again, with a very weak Richmond Fed manufacturing survey largely ignored.  Another big pullback in oil prices and decent accompanying rally in the dollar weighed on Treasuries.  MBS selling, which was not an issue Monday, was a problem again for a good part of the day (though this reversed later) after weighing heavily on the market late last week.  A major rally in financial stocks was not helpful, though the market was already under significant pressure early on even when financial stocks initially opened weak after a round of poor earnings reports and dividend cuts that were a change from the recent run of generally bad but not as bad as feared results from a number of major banks. Agencies underperformed swap spreads, resisting the spread tightening move.  Lighter flows were skewed toward better selling.  Discount notes were cheaper alongside the Treasury sell off and flattening.  FHLB's 3m auction stopped 11bps cheap to FHLMC's 3m auction yesterday. Legal Disclaimer Federal Home Loan Bank of Dallas and is provided to you for information purposes.  Under no circumstances should it be considered an offer or solicitation for the purchase or sale of any financial instrument or advice or recommendation to enter into or conclude any financial transaction. The information provided herein is not intended to provide a sufficient basis on which to make an investment decision and this material does not constitute "research".  Portions of the information contained herein have been obtained from sources believed to be reliable, but the Bank does not represent or warrant that it is complete or accurate.  The views and opinions reflected herein are subject to change without notice.  Neither the Bank nor any officer, director or employee thereof accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. No part of this document may be reproduced in any manner without written permission from the Bank.