The 10-year [tag]T-note[/tag] is again falling toward 5 percent, and has taken low-fee mortgage rates to 6.75 percent. Newspapers today say that “[tag]mortgage rates[/tag] rose” this week, but this factoid is based on [tag]Freddie Mac[/tag]’s bone-headed method of early-week survey and delayed (Thursday) release. Rates had risen in nervous anticipation of Federal Reserve Chair [tag]Ben Bernanke[/tag]’s Wednesday testimony to Congress, but fell instantly — before he began to speak — on release of his prepared remarks.

Bernanke’s communication skills are improving: the testimony was as bland and even-handed as could be. However, the heart of his testimony, and the strong reaction in the bond and stock market, were odd. Bernanke, now repeatedly referring to a “moderating” economy, offered a forecast of GDP growth to decline from “3.5-3.25 percent in 2006 to 3.25-3 percent in 2007,” and core inflation to decline from “2.5-2.25 percent in 2006 to 2.25-2 percent in 2007.”

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