MARKET COMMENTARY

Treasuries were little changed, with the difference in yield between two- and 10-year notes near the widest since March, amid speculation the $700 billion U.S. bank- rescue package will fail to revive the world's largest economy. U.S. notes pared earlier gains before the House of Representatives votes on the bailout plan for banks later today. The Senate yesterday passed the proposals with inducements so the House would back the rescue plan after rejecting an earlier version.

The yield on two-year notes fell 2 basis points to 1.80 percent as of 7:13 a.m. in New York, according to BGCantor Market Data. The 2 percent security maturing in September 2010 increased 1/32, or 31 cents per $1,000-face amount, to 100 12/32. Ten-year yields declined 1 basis point, or 0.01 percentage point, to 3.74 percent. The difference between two-and 10-year yields widened to as much as 1.97 percentage points.
Treasuries pared gains after Europe's Dow Jones Stoxx 600 Index added 1.4 percent on anticipation the rescue package will be approved in the House today. Futures on the Chicago Board of Trade show a 60 percent chance the Fed will reduce its 2 percent target rate for overnight bank loans by 50 basis points at the October meeting. The odds were 34 percent yesterday.

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