Rates are slightly up on the opening on the two news items in the header. Yesterday, Bernanke said in testimony at a House Budget Committee hearing that the impact of the European debt crisis on U.S. growth is “likely to be modest” if financial markets “continue to stabilize”. This “positive-US” news worked to raise rates slightly.

Secondly, we are in the middle of a $70 billion bond sale this week, and the demand of that is weighing on prices. Even though this sale is down from recent weeks, the appetite for US notes/bonds has been pretty saturated in the recent wave of new debt and spending. In fact, as Bernanke was recapping that the U.S. recovery is being restrained by the housing and commercial real-estate markets he also repeated his call for lawmakers to come up with a long-term deficit-reduction plan.

Surveyed expectations are that rates will be 3.80% by the end of the year. Meanwhile the short term should be relatively stable.

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