Ben Bernanke's testimony to Congress today received a cautious welcome from the credit markets, but it is questionable that any more light was shed on the direction of monetary policy.

The Federal Reserve governor's prepared comments released prior to his appearance in the House of Representatives were interpreted as dovish by the markets. He reinforced the message that policy decisions are conditional on economic data, stating that the pace of asset purchases is "by no means on a pre-set course".

He also drew a clear distinction between the Fed's two main policy tools: quantitative easing is aimed at boosting the economy in the short term; forward rate guidance acts to loosen policy over the longer term.

None of this was anything new, but Bernanke's statement may have assuaged some fears that the Fed was set on a course to taper QE sooner rather than later. At the time of writing, Bernanke is being questioned by the House committee - this may well produce market moving headlines.

The Markit iTraxx Europe was 1.5bps tighter at 105bps, with Spanish corporates notable underperformers. Telefonica (250bps, +13) and Iberdrola (215bps, +14) both widened amid tenuous rumours that the Spanish sovereign was about to be downgraded. It appeared to be idle speculation and there were no credible sources behind the rumour.

Here in the UK not everyone is enjoying the heatwave, but home improvement retailer Kingfisher continued to rally as temperatures soared over 30 degrees in London. The company's spreads tightened 3bps to 86bps, and have rallied by 30bps since June 21. We will find out in next week's trading statement if the hot weather has triggered higher barbecue sales.

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