If anything, the mystery has deepened. Back then, it seemed that long-term rates might just be slow to rise. Now it looks like they could stay low for  ...  well, for who knows how long?

Forever?

That would be good news for anyone who expects to need a new mortgage someday. And it would be good for stock-market investors, as low rates on fixed-income holdings make stocks comparatively more attractive, shoring up share prices.
 
But it wouldn't be so good for people who depend on interest-paying investments such bonds and certificates of deposit.
 
So it would be nice to know what's keeping long-term rates down, and whether things will stay this way.
 
The answer: The mammoth foreign investment in U.S. bonds.

At least that's the view of two Virginia economists, Francis E. Warnock of the Darden Business School at the University of Virginia, and Veronica Cacdac Warnock of the School of Architecture in Charlottesville. Their paper, International Capital Flows and U.S. Interest Rates, was recently published by the National Bureau of Economic Research.
 
Many economists have noted that foreign investing influences interest rates in the U.S., but the new study appears to be the first to clearly measure the effect.
 

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