Fed chairman Ben Bernanke gave a relatively upbeat synopsis of the economy while testifying in front of Congress this morning. The reaction in the markets is opposite of yesterday’s when he gave a more pessimistic outlook (stocks are up and bonds are down). I’m not sure why the change in sentiment.
Yesterday’s US Treasury auction went fairly well as we expected. Today the Treasury will auction $21 billion in 10-year notes. I also expect demand for this auction to be sufficient which is good for mortgage rates.
In the absence of any economic data I expect mortgage rates to react to the stock market. I will shift my outlook to neutral.
Current outlook: neutral