After a stronger-than-expected Chicago PMI bond markets began to weaken, but had held within their 2-day range until the release of Bernanke's prepared speech. Though there were no major surprises in the testimony, Bernanke's mention of short term inflation increases was not guaranteed. Additionally, there was no reinforcement of the possibility of QE3. Fannie 3.5's are down 7 ticks to 103-12 but are a moving target at the moment. If you had a rate sheet already, expect reprices for the worse.
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