Sadly, General Motors (once the largest corporation in the world) filed for bankruptcy protection (Chapter 11). Today, GM announced that they may have over $170 billion in debt.

As far back as five years ago, GM's underfunded pension and health care liabilities were almost five (5) times the combined market value of the once mighty automaker. As my friends, family, and clients may remember, I predicted the future bankruptcy of GM, Ford, and Chrysler several years ago after learning how bad their debt to asset ratios were back then.

On a parallel note, the Federal Reserve also announced that they are not "targeting long rates" in response to the increasing 10 year Treasury yields (affects 30 year mortgage rates) in recent weeks. The Fed, supposedly, is not sure what is causing Treasury rates to worsen in recent times.

Listed below may be some reasons for the weakening U.S. Treasury Bond market:

* Rising Treasury yields and a steepening yield curve may mean that investors (domestic and foreign) are worried about the U.S. fiscal outlook due to the declining job market, record deficits, and declining asset values (stocks, bonds, real estate, commodities, etc.).

* Some investors are concerned about the potential collapse of the U.S. dollar, and rampant, runaway hyperinflation equivalent to the old Weimar Republic in Germany (early 1920s) partly due to the trillions and trillions of dollars being created "out of thin air" by both the Fed and the U.S. Treasury.

* Also, China and Japan have consistently purchased over 50% of the outstanding U.S. Treasury debt in recent years. Recently, China (the overall largest holder of U.S. Treasury debt) has decided to purchase shorter term U.S. Treasury debt than the typical 10 year Treasury debt.

After taxes and inflation, many of these bond "investments" are generating negative returns to investors so a 10 year Treasury investment doesn't look as appealing as it once did in the past. If you are thinking about refinancing your home, or locking into a purchase loan in the near term, then it may be wise to consider locking sooner rather than later as the long term rate outlooks continue to worsen.