Bonds are bland, fixed income between 1% and 6%, low risk, low return, not news worthy. The bond market has almost no media coverage, its just not exciting. However, the bond market may be become the main event of the downturn.
The US and the world has seen a massive flight to safety as people dumped their stocks and ran to US Bonds for safety. Simultaneously the US government opened its coffers to everyone, which it could do without raising interest rates due to the massive purchase of US Treasuries.
As the world calms from the near term panic, people, companies, and countries may stop buying US Treasuries in droves. Since the USA has committed to guaranteeing everything in sight, plus 700 Billion in bailout cash, FDIC coverage, normal billions of dollars a day budget deficit spending, and other debt commitments made in recent months, the US government is going to need the world to continue to buy US Treasuries to finance this spending without raising rates.
What if there isn't enough buyers for the US Debt machine? Interest rates will rise to "attract" dollars (see inflation vs deflation). The more US Federal Bond interest rates rise, the more NEW fixed mortgages interest rates rise. New home buyers and resetting ARM mortgages will pay more interest. This will yield in home price's falling further.
NOTE: If the cages of fear keep rattling, this beast will remain in the shadows.
This sentiment can be found in an article in Money week, as well as my previous blog rantings here, here, and here.