Sorry to double post - but just to add, another possible...

Sorry to double post -

but just to add, another possible explanation of yields - perhaps even more obvious than a deflationary scenario is of course it might be the fed propping up the market.

It does depend on the size of their purchases relative to the total market - and I don't have that data to hand and haven't looked at it in any detail. Zero Hedge has been tracking it assiduously though if people want to check it out.

Of course, to key points to bear in mind here. If the fed is propping up the bond market its a double edged sword for them. It keeps rates low and supports the housing market - but it also feeds into the deflationary perception which is not what they want at all. The second point is that there aren't many long dated treasury purchases left if I remember correctly. So we'll have to see what the bond market does going forward.

As always - the most heinous thing about government intervention is that you can no longer use markets as a measure of perception (and in turn using that measure of perception as a measure of reality).