US bond investors are caught between two competing forces. Pulling one way is an economy that is still deteriorating amid a falling housing market, hefty job losses and low consumer confidence. Pulling the other way are record new debt sales – needed to finance the country’s bank rescue and fiscal stimulus packages.

The stalemate between these two forces helps to explain why Treasury yields remain anchored in a well-defined range, unable to make a decisive break higher, or return to their recent historic lows.