The recent rally in U.S. Treasurys is a sign that the decline in oil prices is probably for real. Unfortunately, it’s also an indication of more economic weakness ahead.

Bond prices have rallied lately. And that’s both a good thing and bad thing.

The encouraging news is that the recent bump in bond prices and resulting dip in yields is probably a sign that the worst of the oil-fueled (pun intended) inflation fears are over.

The yield on the benchmark U.S. 10-year Treasury is now hovering near 3.8% – down from about 4.15% just a month ago.

What’s the bigger economic concern right now: the credit crunch or inflation?
Higher bond prices and lower yields are usually a sign that pricing pressures are waning since inflation eats into the value of fixed-income investments.

And with oil prices falling in the past few weeks and the dollar strengthening, bond investors have had reason to cheer.

“One thing helping Treasurys out is the performance of the dollar,” said Steve Van Order, chief fixed income strategist with Calvert Funds in Bethesda, Md.

“People aren’t looking at the rearview mirror on inflation or the yield on the 10- year would be well above 4% right now. The inflation concern has moved away a bit,” Van Order added.

But, of course, behind the bond rally lurks a big dose of gloomy news: The United States may remain in an economic funk for some time and the rest of the world is starting to slow down as well.

“Inflation pressures may have eased slightly. But more important is the outlook for the economy,” notes John Canavan, an analyst with Stone & McCarthy Research Associates, a fixed-income and economic research firm. “It will remain weak. The situation in housing will pressure economy well into next year.”

With fears of an imminent government takeover of beleaguered mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) pushing down both stocks to fresh new 52-week lows Wednesday morning, there is ample reason to believe that bond yields may fall even lower.

With money fleeing once-hot commodities, Treasurys may benefit from the proverbial “flight to quality” – the notion that U.S. government debt, despite the nation’s economic woes, are one of the least risky bets an investor can make in turbulent times.

“In this environment, Treasurys could do well for people looking for safety,” Van Order said. “If you’re taking money out of the commodities market and looking for a place to put it, Treasurys would be it.”

So what’s this all mean? As long as the 10-year yield remains this low, the Fed is likely to keep holding interest rates steady as it has for the past two meetings. If inflation fears continue to wane, the central bank probably won’t want to upset the fixed-income markets.

And that, unfortunately, means more of the same for the economy for the foreseeable future.

But the one bright spot, if you could call it that, is that the markets may finally be nearing a point where most of the bad economic and financial news – even what now seems to be an almost inevitable bailout of Fannie and Freddie – is priced into bonds.

To that end, Canavan predicts that 10-year yields could fall a little further – to about 3.6% – if the credit crisis deepens and the economy continues to weaken.

However, he does not think that long-term yields will fall as low as 3.28%, the level they hit back in March just before the Federal Reserve stepped in and engineered JPMorgan Chase’s (JPM, Fortune 500) fire sale “takeunder” of investment bank Bear Stearns.

“There is the potential for further downside in yields. But most of the fears are already priced in even though the troubles in financial sector will remain,” Canavan said. “There will be more write downs but they are no longer the surprise they once were.”

Van Order agrees. “There has been a renewal of uncertainty – which therefore leads to fear regarding financials in general. That said, the level of fear is less than it’s been before,” he said.

Comments by Federal Reserve Chairman Ben Bernanke that persistent problems in the financial markets threaten the nation’s economy did little to change the dollar’s upward move.

The 15-nation euro traded at $1.48, down from $1.49 late Thursday. The greenback bought ¥110.08, up from ¥108.44.

Global economies slow: The dollar was sharply higher versus the pound after the United Kingdom’s 2nd-quarter gross domestic product was revised to no growth, below economists’ forecast of a 0.2% increase, according to Tom Benfer, director of foreign exchange at Bank of Montreal.

The pound was trading at $1.8526 Friday, sharply below $1.8778 late Thursday. When “one currency moves that far, the other currencies follow to an extent,” said Benfer.

This follows reports showing economic declines in the quarter in both Japan and the euro zone, said Vassili Serebriakov, currency strategist at Wells Fargo.

“We have seen strong evidence that economic growth is slowing globally,” he said.

As other economies struggle, the dollar has had an opportunity to climb. “A number of economies are slowing sharply – that has helped the U.S. dollar over the past couple weeks,” said Serebriakov.

The dollar has been trending higher for the past 2 weeks. “The events of the previous 2 weeks strongly suggest that we have seen the cyclical bottom in the U.S. dollar,” said Serebriakov.

Bernanke: The Fed Chairman spoke about the economy at an annual Jackson Hole, Wyo., symposium sponsored by the Kansas City Federal Reserve.

“Although we have seen improved functioning in some markets, the financial storm that reached gale force some weeks before our last meeting here in Jackson Hole [last August] has not yet subsided,” Bernanke said. “Its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment.”

“The initial reaction as far as the dollar is concerned is muted,” according to Benfer. The stock market firmed after the speech, however, and he said that is “generally supportive of the dollar.”

“He did indicate that the Fed is watching developments very, very closely – they are not taking their eye off the ball,” said Benfer.

“The markets are looking for a blueprint, a battle plan, a sense of direction,” said Benfer. “If the markets get some sense that the central bank, the Treasury have their arms around this – even if it takes a long time – that will be a positive.”

Dollar and oil: Oil prices tumbled by the 2nd-largest 1-day drop ever, in dollar terms, on the back of the stronger dollar. Crude futures closed $6.59 per barrel lower to settle at $114.59 on the New York Mercantile Exchange.

The drop in the price of oil was the biggest single-day fall in dollar terms since Jan. 17, 1991, when oil fell by $10.56.

On Thursday, the dollar lost ground on fresh concerns about the financial sector. As the dollar weakened, investors moved their funds into the commodity market, helping oil prices jump more than $6 a barrel.

“The key short-term driver [for the dollar] has really been the oil price,” said Serebriakov.

High oil prices hurt U.S. companies and consumers, affecting economic growth.

“Higher oil prices have significant effect on the U.S. growth – that is the primary reason why oil is bad for the dollar,” said Serebriakov.

In addition, a weaker dollar makes oil cheaper to foreign investors, because crude oil is traded in U.S. currency globally. In addition, when investors watch the dollar fall, commodities appear to be a safe haven for their assets.

“The oil and the dollar have moved together, but it is not a simple answer as to what is driving what,” said Serebriakov. “They go hand in hard, and it is the chicken-and-the-egg problem.”

First Published: August 22, 2008: 9:39 AM EDT

Crude turns lower as dollar gains

Gas price average below $3.70

Bernanke: Financial storm not yet over

Which is why I was particularly curious to take a joy ride in July on the brand-new Hawker 4000, the first plane to offer big-jet safety and technology features at a midsized-jet price.

Okay, so it’s still $21 million. But consider: It’s $2 million cheaper than a Gulfstream G200 and $7 million less than a Falcon DX, and it has a range of 3,280 nautical miles – that’s coast to coast or New York to London nonstop.

The 4000 boasts cutting-edge avionics, auto throttle, and multiple duplicate systems (for safety) unavailable in comparable-size jets – only on the big boys.

A body like no other
Hawker Beechcraft is also the first manufacturer to certify a composite-body jet with the FAA. “It was six steps back to do composite,” says chairman and CEO Jim Schuster of the 20-year, $1 billion development process. But the resulting body is 70% stronger than aluminum, doesn’t corrode, is easier to repair, and has no life limit.

Amazingly, the fuselage is composed of three enormous pieces – vs. more than 10,000 on a traditional competitor. It’s also three times thinner, meaning there’s noticeably more room inside the standup, flat-floor ten passenger Hawker.

Tucked into its fine leather – HBC offers limitless leathers, woods, and exotic materials – I felt the obvious power during takeoff. The next thing I noticed was the relative peace: The 4000 has the quietest cabin in its class.

There’s already a two and a half year wait list, in part thanks to orders from fractional-jet companies like NetJets and BJETS, so even those who won’t be buying a 4000 may still be able to hop aboard one soon.

Private jet etiquette
So you have friends in high places, and they’ve offered to bring you along. Follow these rules if you want to be invited back.

Ask in advance how much luggage you may bring.
Don’t take your seat until after the owners find theirs.
Never tip the staff. That’s entirely up to the owner.
Nix bringing your own meal. But offering to feed everyone – preferably by air caterer – is a nice gesture.
Skip the red wine. You don’t want your hosts to remember you every time they see the stain on the carpet.
Arrange for transportation when you land. Asking for a lift is an inconvenience.
Show your thanks. One owner gives a gift equal to a first-class commercial ticket when she flies with other owners. You may not need to go so far, but don’t skimp either. — Diane Tegmeyer

The Federal Reserve reported Friday that industrial production edged up 0.2% last month. That was half the pace of the 0.4% gain in June, but it did surpass analysts’ expectations for flat production in July.

The increase reflected a 0.4% gain in output at manufacturing plants. Motor vehicles and parts showed the biggest increase in manufacturing, advancing for a third straight month.

These gains were not seen as signaling a sustained rebound, however, given the problems facing the auto industry this year. Instead, the rebound in auto activity was viewed as a temporary improvement because a strike ended at parts supplier American Axle.

Even with the recent gains, production at auto plants remained 10.4% below where it was a year ago.

The increase in manufacturing helped to offset a big 1.9% drop in output at utilities, a decline which followed a 2.3% surge the previous month. Both changes were seen as weather-related.

The big June jump came from hotter-than-normal weather requiring increased electricity production. The decline in July reflected a return to more normal weather which meant a drop in utility output compared to the previous month.

Output in the mining sector rose a strong 0.9%, matching the increase of the previous month. The gains in this sector have been paced by strong activity in oil and natural gas production.

With all the changes, the nation’s factories, mines and utilities operated at 79.9% of capacity in July, up slightly from June when the operating rate was 79.8% of capacity. That level remained below the average operating rate of 81% seen over the last 25 years.

Industry is having to struggle this year with a steep slump in housing, which has hurt producers of building supplies and furniture, and the continuing problems in the auto industry, which saw sales drop to the lowest level in 16 years in July.

A boom in U.S. export sales because of the weak dollar has helped offset this slump There is concern that the export boom may not last given spreading weakness in major overseas markets in Europe and Japan.

The Charlotte, N.C.-based bank will also pay $50 million in fines to be distributed among states.

Wachovia (WB, Fortune 500) is the fifth bank to agree to repurchase the troubled securities over the past two weeks, following Citigroup Inc., UBS AG, JPMorgan Chase & Co. and Morgan Stanley.

Auction-rate securities are investments that resembled corporate debt, but their interest rates were reset at regular auctions.

The market for the securities collapsed in February amid deterioration in the broader credit markets.

“They took my $400 out of my account immediately of course,” Read said. Since both use the same bank, hitting his wife with an overdraft fee seemed “absolutely ridiculous” to him.

Overdraft fees set in when a bank approves a transaction even if the customer doesn’t have sufficient funds. The bank is essentially providing a temporary loan and charging plenty – usually between $25 and $35, no matter how big or small the transaction.

Banks typically provide overdraft protection automatically, and while it’s touted as a convenience, the cost can come as a shock to unsuspecting customers.

“Banks should have to get their customers’ affirmative consent before signing them up for their most expensive loans,” Jean Ann Fox, director of financial services at the Consumer Federation of America said in a statement.

Almost half of all overdrafts happen with debit card purchases, according to the Center for Responsible Lending. And most debit overdrafts are small, averaging less than the overdraft fee, the consumer advocacy group said.

In a recent study, the Consumer Federation of America found that overdraft fees at the 10 largest banks are on the rise. The average highest fee charged for overdrafts is $34.65, up 15% from 2005, the consumer group said.

There can be additional fees if the overdraft is not repaid by making a sufficient deposit within a few days and customers can rack up as many as six or seven overdraft fees in one day if they aren’t aware of their low balance.

Talkback: Have you been hit with overdraft fees?
Now Congress may step in.

Reps. Carolyn Maloney, D-N.Y. and Barney Frank, D-Mass., have proposed the Consumer Overdraft Protection Fair Practices Act in an attempt to protect consumers from hefty fees.

“I’ve been working on reducing sky-high overdraft fees for several years now,” Congresswoman Maloney said in an e-mail. “Overdraft loans can be useful financial tools, but many consumers are being enrolled in costly overdraft protection programs without their consent. [Under the bill] consumers would have to “opt-in” to overdraft protection programs and banks would be required to inform consumers when they are about to overdraw their accounts.”

The bill, which is currently pending before Congress, also requires that banks provide full, written disclosure of their overdraft policies to customers.

In a statement, Citibank (C, Fortune 500) said that full disclosure is already standard practice, and overdraft fees should not be viewed as unfair or deceptive, since Citi customers are informed about the practice and the $34 overdraft fee.

What can you do?
Other banks also counter that their overdraft policies are clear and the fees are disclosed at the time an account is opened. Also, since many banks offer online banking, telephone banking and balance alerts via e-mail for free, consumers should be able to keep a careful eye on their balance.

“In most cases, banking customers can avoid overdrafting their accounts and paying any associated fee by knowing their balances,” said Fred Solomon, a spokesman at PNC (PNC, Fortune 500) bank.

PNC recently sent its customers a notice allowing them to opt-out of overdraft access. “They can call PNC and we will automatically exclude them from the convenience of overdraft access for all ATM transactions and purchases,” Solomon said.

Other banks will do this too, although the consumer may have to take the initiative and ask for it.

Another way to avoid costly overdraft fees is to sign up for an overdraft protection plan with a linked account. Those plans allow banking customers to link their checking account with a savings account or even their credit card. So if you write a check and there isn’t enough money in your checking account to cover it, then the bank will draw the money from another account.

But that assumes that you have other funds. And despite the fact that your backing the account with your own money, in most cases there’s a charge for that service too, although it’s far less than the overdraft fee. For example, Chase (JPM, Fortune 500) customers get charged $5 for each time they use their overdraft protection plan. Fifth Third Bancorp (FITB, Fortune 500) offers this service for $9 a pop. If you use the overdraft protection more than 10 times in a 12-month period, then the fee gets upped to $15.

Despite the expense, there is an upside to overdraft protection. It not only allows you to complete a transaction and remain in good standing with the parties you do business with, you also avoid the potential embarrassment of being denied at the register. That might be worth $35 to some people.

Need more time? You get the point: big media seem to lack the genes necessary to create online stars from scratch or find future ones when they’re still babes.

Two big-media refugees, Jon Miller and Ross Levinsohn, think they can do the job. “Here’s the thing: we make the bets we make, because we know what people need,” Miller says. “In a way, we provide outsourced R&D for the media industry.”

It’s an interesting niche, made more noteworthy by who Levinsohn and Miller are and the curious places they’ve been popping up lately. Both are deposed digital chieftains from big media – they were booted from their jobs running AOL (Miller) and Fox Interactive Media (Levinsohn) within two days of each other in November 2006.

A week later, they decided over drinks at the Four Seasons in Beverly Hills to ignore the headhunters and go into the venture-capital game. They found backing, and Velocity Interactive Group was born. They’ve made 14 investments, the sum of which give an illuminating (though not wildly surprising) view of where media is headed: think online video, giving audiences the tools to create their own content, and India, and you have a start.

And, yes, if it was so easy to pick winners every media company would have a few to crow about.

Several media executives I spoke to say they’re watching what Miller and Levinsohn are doing and give them props for spotting a deal: Levinsohn suggested to News Corp. (NWS, Fortune 500) founder Rupert Murdoch that he buy MySpace in 2005 when it was still young, while Miller is credited with arguably AOL’s shrewdest deal of its star-crossed recent history – buying Advertising.com in 2004.

They’ve shown up in walk-on roles in the months-long tangle between Yahoo (YHOO, Fortune 500) and Microsoft: both Miller, who lives in New York, and Levinsohn, who is based here, were put forward as prospective Yahoo directors. Miller was a choice of both Yahoo’s Jerry Yang and agitator Carl Icahn, but his appointment was squelched at the last minute by Time Warner (TWX, Fortune 500) (which owns this Web site) because of his non-compete agreement; Levinsohn had been on a slate Microsoft assembled for a proxy fight it decided not to launch.

Miller was also brought in by a group of unhappy investors of CNET Networks to sit on a dissident board. But before a proxy fight could happen, CNET was sold to CBS (CBS, Fortune 500). Says Levinsohn: “Playing on the venture side allows us a great look at the future of the business, while staying involved in bigger companies allows us a window into what the industry leaders are thinking and looking for.”

Last December, Velocity took over management of a venture-capital firm called ComVentures, which already had $1.3 billion invested in communications businesses and an initial fund of around $300 million for them to play with. (The pair aims to raise another fund this fall.)

Given their keen interest in finding the next killer video startup – whoever will be to YouTube (GOOG, Fortune 500) what Facebook is to MySpace – they’ve put money into Broadband Enterprises, Generate, and NextNewNetworks. Together, they comprise what Miller dubs a kind of “virtual studio”: Broadband Enterprises produces and distributes video commercials for the Web; Generate is a talent manager and mini-studio for Web video; and NextNewNetworks creates and programs super-niche online video networks.

Another investment is MixerCast, a business that lets people make video “mash ups” of media or advertising – exactly the sort of thing that traditional media companies may not spend a lot of time on. Most recently, they funded Crowd Fusion, an online publishing startup that lets people create professional-looking Web sites.

Through Keyer Patel, one of three ComVenture partners who stayed on when it was rechristened Velocity, the group also made one of its biggest single investments: $25 million for a 5% stake in the Indian broadcaster NDTV Networks. The deal made Velocity look plugged in, when, a few weeks later, NBC (GE, Fortune 500) bought a 26% stake in NDTV with rights to acquire control.

Whether Velocity’s founders will turn out to be smart, lucky, both or neither remains to be seen. But given how their last gigs turned out, it’s pretty clear they think they have something to prove. And they insist Velocity is not just a parking spot until another big corporate job comes their way: Miller’s potential involvement with Yahoo led to chatter that he was being considered to succeed Yang. (Miller denies it.)

Rather, they’re happy to help find and build the next great thing that their former employers will one day pay up for. Levinsohn says he likes meeting with twenty-somethings who need as little as $150,000 to launch. “These kids haven’t been beaten down by the corporate structure of anything,” he says. “It’s so refreshing.”

Oil futures have tumbled about 33% since striking an all-time high of $147.27 a barrel last month.

Dollar strength: The U.S. dollar charged higher, pressuring many investors to pull money out of oil.

The dollar rose against all major currencies Friday and hit its highest level in nearly two years against the British pound.

Crude is traded in dollars, and a stronger greenback makes oil relatively more expensive to foreign buyers. Many investors have also been buying oil to hedge against dollar inflation.

“Crude probably has to move lower in the short term – perhaps to $105 or even $100 – before we can wring out the last bastions of speculative excess that are baked into the price,” Tom Orr, head of research for Weeden & Co., wrote in an email.

Global woes: Oil futures were also under pressure after economic data released this week suggested the global economy is slowing significantly.

Reports from Europe, Asia and the U.S. all pointed to the possibility of lower oil demand worldwide.

“When you see evidence from several areas, people are much more likely to believe in demand decline,” Neal Dingmann, senior energy analyst with Dahlman Rose & Co., said.

A report on Thursday from the European Union’s statistics office showed the 15-nation euro zone economy contracted by 0.2% in the second quarter.

The euro zone’s three largest economies – Germany, France and Italy – all shrank during the period.

Meanwhile, a report released earlier in the week showed the Japanese economy contracted in the second quarter.

“There’s a slowdown in demand for oil and copper and the whole gamut of industrial commodities,” said Paul Kasriel, chief economist with Northern Trust.

Because of slowing growth overseas many expect non-U.S. central banks such as the Bank of England and the European central banks to start cutting their key interbank lending rates to inject cash into their economies, according to Kasriel. However, that would also weaken their currencies and add strength to the dollar.

The U.S. Federal Reserve has held rates at 2%, citing inflation as a concern.

High fuel prices pushed inflation to an annual rate of 5.6% in July – the highest level in 17 years – according to the Labor Department.

U.S. gas prices fell for the 29th straight day to an average of $3.771 at the pump, AAA reported Friday. Gas prices have fallen below $4 a gallon in all but six states. However prices remain more than $1 above where they were a year ago.

The Dow Jones industrial average (INDU) added 0.3% over 2 hours into the session and the broader Standard & Poor’s 500 (SPX) index gained 0.3%. The Nasdaq composite (COMP) lost 0.1%.

U.S. light crude oil for September delivery touched a more than three-month low of $111.34 a barrel on the New York Mercantile Exchange, before recovering a bit to trade at $112.16 a barrel, a gain of $2.85. Oil prices have plunged around 23% since peaking above $147 a barrel in mid-July.

Other commodity prices have been falling too, including gold, silver, aluminum and platinum as investors have bet that the global commodities boom will be tempered by sluggish economic growth in the U.S. and overseas.

The same bets have given a boost to the U.S. dollar, which on Friday hit a two-year high vs. the pound and also gained against the euro and yen. (Full story)

COMEX gold for October delivery fell $22.40 to $788.30 an ounce.

While the drop in oil and other commodity prices was good for stock market psychology and for sectors like transportation and retail, it was not good for the underlying stocks, including oil services.

Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500), Alcoa (AA, Fortune 500) and a number of gold stocks all declined.

Company news: Ambac Financial (ABK) and MBIA (MBI) led the financial sector higher after Standard & Poor’s took the companies’ bond insurance arms off negative watch and affirmed their AA ratings. The companies remain on “negative outlook.”

In earnings news, software maker Autodesk (ADSK) and retailers Kohl’s (KSS, Fortune 500), Nordstrom (JWN, Fortune 500), Abercrombie & Fitch (ANF) and JC Penney (JCP, Fortune 500) all reported earnings that were better than what analysts expected.

All five stocks rose in the morning, including JP Penney, which also warned that current-quarter results won’t meet forecasts, but the stock gained anyway.

Market breadth was mixed. On the New York Stock Exchange, winners and losers were narrowly mixed on volume of 580 million shares. On the Nasdaq, decliners edged advancers by a narrow margin on volume of 820 million shares.

Economic news: The August N.Y. Empire State index, a regional read on manufacturing, showed a surprise jump in the month vs. forecasts for a further slowdown. The report, released by the New York Fed, rose to 2.8 vs. forecasts for a decline to -5 from a reading of -4.9 in July. Any reading that is positive shows growth, while a negative number shows contraction.

A separate report showed a rise in July capacity utilization that was in line with forecasts and a rise in industrial production that was stronger than expected.

Another report showed the August consumer sentiment index from the University of Michigan rose to 61.7 from an earlier read of 61.2. Economists surveyed by Briefing.com thought it would improve to 62.

Other markets: In global trading, most European markets were higher near the close. Asian markets ended mixed, with the Japanese Nikkei posting gains and other indexes seeing declines.

In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.85% from 3.89% late Thursday.

Retail gas prices dropped overnight, extending a downward trend for a 29th day, according to a survey of gas station credit-card activity.

The dollar’s move follows a sharp drop in oil prices, a better-than-expected earnings report from Wells Fargo and reassuring words from Federal Reserve Chairman Ben Bernanke about mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500). (Full story)

Track 17 major currencies

The dollar increased to ¥104.87 Wednesday afternoon from ¥104.73 late Tuesday. The greenback had hit a low of ¥103.78 earlier in the day. The euro traded at $1.5817, continuing a pullback below the $1.60 mark. The euro hit an all-time high against the dollar of $1.6038 Tuesday morning before settling at $1.5912 late in the day.

The pound edged lower against the dollar, coming in at $1.9989 from $2.0057 late Tuesday.

The most important factor behind the dollar’s rise has been the two-day drop in oil prices, according to Gareth Sylvester, a currency strategist with HIFX.

“The drop in oil yesterday certainly helped the U.S. dollar recover from its low against a basket of currencies,” he said.

Oil dropped Wednesday by $4.14 to settle at $134.60 a barrel, bringing the two-day decline in crude futures to $10.58. (Full story)

The dollar is also benefiting from some upbeat corporate news, said Kevin Chau, a foreign currency analyst with IDEAGlobal.

“Anything positive out of the U.S. will create a jolt to buy dollars,” he said, citing Wells Fargo (WFC, Fortune 500)’s and a government report that showed a higher-than-expected jump in crude inventories.

Wells Fargo reported a profit drop that was milder than anticipated and lifted its quarterly dividend by 10%. (Full story)

“Markets over the past few months have been negative on the dollar, so it’s a crowded trade and markets are looking for a new theme, and that’s for a dollar bull,” said Chau.

He added that Bernanke’s comments to Congress about Fannie Mae and Freddie Mac being “adequately capitalized” caused the dollar to “pop” a bit, but says the effect will be short lived.