Market commentary

The February ISM Manufacturing index continued its uptrend in February, rising to 61.4, placing the index at its highest level in 27 years as the manufacturing sector, led by overseas demand, continues to lead the economic recovery.
The main focus this morning was Fed Chairman Bernanke’s Semiannual Monetary Policy Report to the Congress (formerly known as the Humphrey-Hawkins testimony) was released. His speech did produce any surprises and Bernanke did not indicate that he would currently support changing the QE2 plans. He does note that the FOMC will continue to review its plans, saying: “My colleagues and I continue to regularly review the asset purchase program in light of incoming information, and we will adjust it as needed to promote the achievement of our mandate from the Congress of maximum employment and stable prices. We also continue to plan for the eventual exit from unusually accommodative monetary policies and the normalization of the Federal Reserve's balance sheet. We have all the tools we need to achieve a smooth and effective exit at the appropriate time.”
So, after all of that, bond prices are retreating this morning pushing the yield on the 10 year note to 3.45%. Mortgage prices are worse by .25%.