NEW YORK (AP) -- Treasury prices closed mixed Wednesday after a volatile session during which regulatory developments that should bolster the housing industry competed for attention with an economic warning from Federal Reserve Chairman Ben Bernanke.
Regulators said they will lift limits on the investment portfolios of mortgage companies Fannie Mae and Freddie Mac. Over time the higher caps should lessen the default rate and boost liquidity in the housing sector. This raised investors' hopes for an easing of the ongoing credit crisis.
But there also were a number of worrisome developments Wednesday that helped spark late-session demand for short-term Treasury, safe assets that perform well when investors are concerned about the economy.
The day's clutch of bad news stories included a warning from Bernanke that the economy is facing the triple challenges of a slowdown, inflation and weak financial markets. The bond market read Bernanke's comments in a more negative light than the stock market did.
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http://biz.yahoo.com/ap/080227/bonds.html?.v=6
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