As the world sat watching the competition in Beijing, Russia took the opportunity to move forces into neighboring Georgia, a close ally of the U.S., and the key transit route by which oil is moved from the Caspian Sea to world markets. The effect on the bond market was immediate as inflation fears rose, demonstrating just how easily world events impact us in this global economy. Offsetting the concerns in Georgia has been a sustained reduction in the cost of crude oil from a high of $147/barrel in July to $113/barrel today. The bond market has rebounded from its initial shock and mortgage rates have improved accordingly to 6.25% for a 30 year conventional loan.