There is news on the interest rate front. "Mortgage applications fell for a third consecutive week as demand for loans to purchase homes dropped to its lowest level in more than two years. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Feb. 10 decreased to 574.1, down 7.3 percent from the previous week's 619.3."

"The MBA's seasonally adjusted purchase mortgage index, which is considered a timely gauge on home sales, fell 7.9 percent to 391.7 from the previous week's 425.1, its lowest level since the week ended Dec. 26, 2003, when it hit 390.1. Borrowing costs on 30-year fixed-rate mortgages averaged 6.25 percent. The 30-year rate, however, was at its highest level since the week ended Dec. 9, 2005, when it touched 6.28 percent."

"Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. economy was running so close to capacity that it faced heightened risks of an outbreak in inflation that could require higher interest rates to tame. In his first extensive remarks since taking office two weeks ago, Bernanke appeared to be making an effort to establish credentials as an inflation 'hawk' by stressing the need to keep price pressures contained."

"'The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately, in the absence of countervailing monetary policy action, to further upward pressure on inflation,' Bernanke said." "He said high energy prices and the possibility of a slowdown in the U.S. housing market after a long boom were potential risks."

"Ben Bernanke, the new chairman of the Federal Reserve, was once nicknamed 'Helicopter Ben' for suggesting during the deflation scare of 2003 that a central bank could always dump money from the sky to jump-start the economy. The suggestion earned Bernanke a reputation in financial markets for being a dove on inflation."

"Some Fed watchers believe that Bernanke's main task during his first testimony to Congress Wednesday and Thursday will be to remove any suspicion about his inflation-fighting credentials. 'He'll want to do whatever is necessary to counter this exaggerated image of 'Helicopter Ben',' says John Lonski, chief economist at Moody's Investors Service. 'That means he doesn't want to show weakness in regards to enemy No. 1, and that's price inflation.'"

"Should he choose to accept it, Bernanke's mission to convey he's an inflation fighter has been made easier: After a fourth-quarter setback, economic growth and inflation pressures are rebounding in the first quarter. Employment and wage pressures picked up in January, and consumption also seems to be rebounding."

"The market now prices in a 98% chance that the Fed will lift its key rate to 4.75% at its March 28 meeting and 100% chance that this rate will be reached by May 10. The market also now sees a 70% chance that 5% will be reached by the May meeting and 94% by the June meeting. Odds that the Fed would hike to 5% by the end of June were only at 24% just two weeks ago."

"In his final year at the Fed, Greenspan began sounding alarm bells about the housing market, which has fueled consumption via ever-rising home equities. Greenspan, who largely created this environment by cutting rates to 1% in 2003 and keeping them there for a year, had began referring to 'froth' in the real estate market."