Despite Federal Reserve Chairman Alan Greenspan's cautionary comments on the future of short term interest rates, the Treasury bond market rallied again on Tuesday.

In his testimony before the Senate Banking Committee, Greenspan suggested that the Fed will leave interest rates unchanged for the time being. He warned, however, that "the risks of a pickup in inflation remain significant". Should inflation pick up, the Fed would be likely to raise interest rates.

In the wake of Greenspan's testimony on Tuesday, the price of the benchmark 30 year Treasury bond gained 3/4 of a point, dropping the yield to 5.66%. The 1 year T-bill yield was unchanged at 5.35%. Greenspan is scheduled to appear today before a House banking subcommittee.

Mortgage rates were unchanged, with the average 30 year fixed rate at 6.86% and the 15 year fixed rate at 6.54%. The 1 year ARM did drop slightly to 5.62%.