Traders are keeping an unusually close watch on spreads these days. Their jobs could be at stake.

The spreads between the yields on securities they sell and Treasury securities could be the closest thing Wall Street has to a crystal ball.

Wider spreads, indicating investors are favoring the safety of Treasuries, have led to layoffs already, and a pall has been cast over many mortgage trading desks as the holiday season approaches.

If spreads stabilize, it is unlikely that more cuts will occur, traders said. But if spreads continue to widen, accompanied by slow issuance, there will be more cost-cutting measures.

"Firms definitely will be contemplating it, no question," said one mortgage trader on Wall Street.

No major firms seem to have avoided making cuts, traders said.

Emerging markets have taken the biggest payroll hit, they said, followed by high-yield and then corporates.

But mortgages and government trading operations are hardly immune, they said.

Donaldson, Lufkin & Jenrette cut 20 jobs from its 126-person emerging markets group in New York and London, just a few weeks after cutting 23 mortgage-backed traders and researchers.

In a memorandum Oct. 20, the firm said it has decided to devote more its resources in emerging markets to "customer business rather than proprietary trading."

While the firm said it was not abandoning emerging markets, it noted that numerous "competing demands for managerial focus and capital resources" led it to "de-emphasize trading" for the time being.

Sources at Bear, Stearns& Co. confirmed that Bear Stearns has cut about 50 jobs from its bond trading businesses but that it was not engaged in across-the-board layoffs.

The cuts, sources said, were part of an ongoing process whereby some people were let go during the summer and some last week.

Other cuts may be forthcoming, sources said.

Salomon Smith Barney laid off about 100 people in its global fixed- income operations 10 days ago, a spokeswoman said.

The cuts, the majority of which affected New York positions, were tied in part to the merger between its parent, Travelers Group, and Citicorp, she said. Sources at Salomon Brothers also said that additional cuts will be forthcoming.

"Wall Street has once again proven how pragmatic it tends to be" with cuts in bad times, said Gene Shen, managing director at Whitney Group, an executive search firm specializing in the financial services industry.

But though the Street will hire again once the market recovers, the layoffs are not over. "There is more to come," Mr. Shen predicted.

Cutting positions before the bonus season is a way to trim costs and to restore shareholder confidence, he said, adding that such maneuvers were a form of "window dressing for the end of the year."

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