Behold the power of the English language. With just five words, Federal Reserve Chairman Ben Bernanke rattled markets Tuesday.
In discussing how housing has slumped (and may continue to slump), Bernanke cited that weakness in the sector should not hold the rest of the economy back.
This is departure from earlier this year. In Q1, it was widely believed that a housing slowdown would result in a slowdown of consumer spending which, in turn, would result in a slowdown in overall growth.
Despite lackluster numbers in the housing sector and rising gas prices, however, the American consumer has proved quite resilient, and continues to buy, buy, buy. That slowdown doesn't seem to be coming anytime soon.
Bernanke addressed his concerns about inflation by saying that the "risks remain to the upside." Inflation, as you'll remember, is the enemy of mortgage bonds.
Bernanke's remarks jolted the markets somewhat. In seconds, the mortgage market turned and, by the end of the day, mortgage rates had finished the day higher.
