Ten-year Treasury yield just under 4%

The government announced the sale of $19 billion in ten-year Treasury bonds today at a rate of 3.99%, while Russia's central bank is reportedly considering a modest move away from holding its reserves in dollars.

As a result bond prices continued on their downward path and yields pushed ever higher, which threatens to stifle the housing market that has been scraping along at very low levels. See Rising Mortgage Rates May Add to Housing Woes.

I've mentioned before how Fed Chief Ben Bernanke has committed over $1 trillion to buy agency-backed securities and another $300 billion in longer-term Treasuries in order to squeeze the risk premium out of the system - that is, narrow the spread between US Treasuries and lending among major financial institutions and thereby lowering borrowing costs.

His plan did temporarily bring down yields on government bonds and spreads have narrowed. See see Credit markets on the mend. But the so-called "bond vigilantes" are in open revolt over the massive federal budget deficit and future worries about inflation. And the spike in yields is playing havoc with homeowners who had planned to refinance mortgages, and it could keep some potential home buyers on the sidelines. See Higher Mortgage Rates Dampen Refi Enthusiasm.