Once again the American Treasury Bond market is telling us the real story about the state of the US economy and the fallout from the sub-prime mess.
And that story is simple: fear and loathing and an aversion to risk are the big drivers at the moment and will be for some time until something happens to put a line in the sand.
And that could very well be the bailout of a large, troubled mortgage portfolio, the takeover or near failure of an investment bank, or some decisive action by regulators.
Amid Friday afternoon's plunge in the stockmarket, the yield on the benchmark 10-year treasury bond tumbled to 4.68%, wiping out all the increase in rates which set off the latest troubles in early June (the bond peaked at 5.32%).
That that happened ahead of a meeting of the US Federal Reserve's key interest rate setting body this week, shows you how fragile confidence is.
There's no chance of a rate rise: nothing will move, but the language of the Fed statement issued after the meeting Wednesday morning, our time, will be watched for commentary on the sub-prime mess.
Already, all those confidence predictions from economists, analysts, investment banks and others that the problems would be contained to the sub-prime mortgage sector, have proven illusory.
A number of European banks and financiers have stumbled, with losses there of possibly $US6 billion or more (on what we know): they are around $A1 billion here, and in the tens of billions in the US.
One big home lender, American Home Mortgage, collapsed on Friday with billions of loans outstanding and a loss that could exceed $US1 billion: it lent money to better rated credit risks, better than sub-prime. Another smaller lender to sub-prime borrowers is also near collapse, according to media reports in the US.
But there are signs the economy might be slowing and while that's a concern, lending to better rated credit risks for home purchases has been sharply cut by two big US banks, Wells Fargo and Wachovia.
That sent home building and property shares lower on Wall Street on Friday and is not going to be good news, especially in California, which is emerging as the most damaged state of all the 50 in the US. Foreclosures in home loans is higher there than anywhere else and Wells Fargo is one of the big lenders in the state (and the second biggest in the US).
The 10-year bond yield touched 4.67% Friday afternoon, the lowest since May 15. Meanwhile, 2-year yields touched 4.42%, the lowest since Jan. 25, 2006.
The Fed's federal funds rate has been 5.25% since June last year.
It was the fourth week in a row that US bond rates have fallen and the driver has been the fears about the spreading impact of sub-prime mortgages and their associated credit derivatives. Now the worries about the health of the US economy are starting to feed through.
As one bond market dealer was quoted by Bloomberg on the weekend: Treasuries are "priced for calamity,'' said Brian Edmonds, head of interest rates in New York at Cantor Fitzgerald. "The fundamentals don't really bear it out.''
And that remains true for the US and here. It is something we have to keep in mind, while not losing sight of the fact that this is a very unpredictable crisis.
No one would have thought Australian funds and small European Banks would have been caught up in it, but that's the nature of global markets and the global marketing of financial products by big investment banks and other financial institutions.
Some economists are attempting to argue that it's just a problem for those in the sub-prime and associated markets: the collapse of a big US home lending institution and those cuts in lending by very sound and very large US banks means it is no longer confined to that part of the economy where the investment banks and their clever operatives hold sway.
