The bond markets have been in disarray since Iraq invaded Kuwait.

"There has been tremendous intra-day price volatility in the Treasury bond market. It's difficult to look at any relative values because prices are all over the place and you can't get a handle on spread relationships," said one market strategist.

What that means is that since all other bonds are evaluated in comparison with Treasuries, the volatile movement in Treasury prices has made it impossible to determine yield spreads -- the differences between annualized returns on investment -- among other bonds.

On Aug. 1, the long Treasury bond closed at a price of 104.38 to yield 8.35 percent, compared with a 98.5 price and yield of 8.87 percent on Wednesday. That's a loss of 5.88 ($58.80 per $1,000 bond) and an increase in yield of 52 basis points, or 0.52 percent.

During the same period, long-term AA-rated public utility bonds were off only 3.25 points ($32.50 per $1,000 bond), with yields rising 33 basis points (0.33 percent). Long-term tax-free revenue bonds were off 2.5 points ($25 per $1,000 bond), with yields rising 30 basis points (0.30 percent). Because corporates and municipals fell in price less than the Treasuries, they are relatively "richer," or more expensive.

Also, Treasuries underperformed all other categories of bonds, while municipal bonds outperformed taxable bonds.

That's because of supply and demand. During the past two weeks, the new issue volume of corporate and tax-exempt bonds has been moderate to small, while the Treasury has had to sell about $50 billion in bills and $32 billion in notes and bonds.

On Aug. 1, when the Treasury's August refunding was announced, the outstanding three-year bond was returning 7.90 percent, the 10-year bond 8.27 percent and the 30-year bond 8.34 percent. Last week's new issues came at average yields of 8.10 percent, 8.77 percent and 8.87 percent, respectively.

After a turbulent week that actually saw bonds rally Thursday after the refunding was over, we are still left with a confused and uncertain market. In the longer term, analysts expect a recession accompanied by lower rates. Timing is everything in investing, so for now, being in three-year maturities or shorter seems to be a good bet.