Is QE3 coming?

It’s the big day the markets have been waiting for and Ben Bernanke’s words are being dissected by investors.  The results at the moment have pushed the Dow up 100 points and the S&P 500 back above 1,400.  While there were few clues given, markets clearly believe in a higher probability that QE3 will be coming.  mortgage bonds are higher as well as rumors indicate that the next round of QE may include mortgage bond purchases.  Bonds have been range bound  for the last 7 days and are currently attempting to break out, but have yet to do so.  If it happens, interest rates will move a notch lower.  We will continue with a cautious floating bias.