with the 5-10 yr. curve at 22bps., that equates to about 4.4/year, or .36 a month. You can sell 4.00 3/10's and buy 4.00 4/10 extend just one month and pick up 1.86 bp's. From this info Ray says Fair Value for three month spreads(based on the shape of the curve from 5yr. to 10 yr.) seems to be 1.1 tics.