Bet on Bonds

Photo-Illustration for TIME by Nilanjan Das; Uncle Sam: Getty Images

During his recent confirmation hearings, Timothy Geithner, the new U.S. Treasury Secretary, described China as a "currency manipulator." Like all politicians, he qualified his statement with various good wishes toward the Chinese, but the damage was quickly done. Markets began to wonder if China would retaliate by scaling back its massive purchases of U.S. government debt, contributing to a 70-basis-point sell-off in 10-year U.S. Treasury bonds between Jan. 26 and Feb. 4.

Geithner's utterance caused interest rates to jump, costing prospective American homeowners (and many that were seeking to refinance existing...

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