The expectation inflation will exceed 2 percent "doesn't suggest that the market is losing confidence in the Fed being able to contain inflation," Ellenberger said.
The yield on the 10-year Treasury note has risen to 2.03 percent from 1.88 percent at the start of 2012. Low Treasury yields have helped keep mortgage-rates near record lows. The average 30-year mortgage in the U.S. was 3.88 percent on March 8, according to a Freddie Mac index, compared to a record low of 3.87 reached last month.
Low mortgage rates are helping to boost expectations for higher sales at home builders. The Standard & Poor's Supercomposite Homebuilding Index has risen 25 percent so far this year, almost triple the 9 percent increase in the S&P 500. Sentiment among builders in March rose to the highest level since May 2007, according to a National Association of Home Builders index.
"From a macroeconomic perspective, things definitely feel better right now," Ara Hovnanian, chairman and president of Hovnanian Enterprises Inc., the largest home builder in New Jersey, said in a March 7 earnings call. "There are more positive trends than negative trends grabbing the headlines. Mortgage rates remain low. The energy sector is booming. There are fewer discussions about fears of a double-dip recession."