Yesterday, Bond prices rose following Fed Chairman Ben Bernanke’s testimony to the House of Representatives, largely because of encouraging talk on inflation, including this statement: "Core inflation should edge a bit lower, on net, over the remainder of this year and next year. If energy prices level off as currently anticipated, overall inflation should slow to a pace close to that of core inflation in coming quarters." Bonds liked the talk of softer inflation, but gains were halted exactly at the very strong double ceiling of the 25-day Moving Average and Falling Resistance Line. Bernanke is at bat again right now, this time testifying before the Senate. He will share the same prepared speech he gave yesterday, but you never know what new questions Mr. Bernanke will be asked to answer and how the markets will react, so stay tuned.

Initial Jobless Claims were reported at 301,000, below expectations of 310,000 and the fewest Claims in two months. The report suggests continued strength in the labor market and Bond prices ticked lower on the news. Later today at 12:00 Noon ET, the Philadelphia Fed will release its Manufacturing Index for the month of July. Economists are expecting the Index to ease to a reading of 14.0 from June’s surprisingly strong level of 18.0. Readings above zero indicate expansion in manufacturing.

Then at 2:00pm ET, the Fed Meeting Minutes will be released - this is the text of the discussion between Fed members from the last Fed Meeting on June 28th. Fed watchers will undoubtedly compare what the Minutes state about the economy, housing, and inflation with what Fed Chairman Ben Bernanke presented on these topics to Congress the past two days. Even though the Minutes are old news and the markets are receiving fresh testimony from Mr. Bernanke today, you never know how this volatile market might react to the release.

Stocks are off to the races this morning, boosted by long-time bellwether and Dow component IBM, which reported their best quarter in five years. Other earnings reports are also painting an optimistic picture for Stocks. As we have seen, sharp moves higher in Stocks can often pressure selling in Bonds.