After a nice rally which pushed the 10 year treasury yields close to the 4.50% range, Federal Reserve Chairman Bernanke basically threw ice water on the rally yesterday. Bernanke gave testimony to the House Budget Committee, "there is a reasonable possibility that we'll see some strengthening of the economy sometime during the middle of the year". "My view is that taking all new data into account, that there is really no material change in our expectations for the US Economy going forward."

Bernanke's comments came despite several key economic indicators showing just the opposite. New home sales plunged in January falling 16.6%, the largest drop since 1994!

Hold onto your hats, could be another wild ride today. The Personal Consumption Index is being released this morning at 830am.