As 2010 began, plenty of market soothsayers were talking about a bond bubble. Interest rates were just too low, they said, and would surely rise rapidly.

So much for their crystal balls. Interest rates have gone down, not up, allowing homeowners and companies to borrow at rates they couldn't have imagined even a year ago, while penalizing savers who live on the income from bonds and bank accounts.

With the Federal Reserve's announcement that it will continue buying long-term bonds, all indications are that these low rates will stick around for quite some time.

"We've got the economy moving kind of slowly, and inflation is staying low, so there aren't a lot of reasons for rates to rise," says Mario DeRose, fixed income strategist at Edward Jones.

If anything, the Fed's slight change of strategy could cause long-term bonds to join their shorter-term cousins at rock-bottom levels. The Fed had been expected to shrink its balance sheet as its bond holdings matured, but now will replace old bonds with new purchases.

"There's still room, amazingly enough, for rates to come down," says Scott Colbert, head of fixed-income investing at Commerce Trust Co. "The consensus is still saying, 'Watch out for the bond bubble,' … but the average investor is ignoring that."

How much further could rates fall? Colbert says the spread is typically 1.5 percentage points between the 10-year Treasury note and the Fed's overnight benchmark rate, which officially is at between zero and 0.25 percent. The 10-year Treasury now yields 2.7 percent, which means the spread is about a percentage point wider than normal.

In bond-market parlance, the yield curve is unusually steep right now. That's because short rates have fallen more quickly than long-term ones.

The two-year Treasury note, for example, yields just 0.5 percent, down from 1.1 percent at the end of last year. It didn't even get this low during the depths of the financial crisis in late 2008, when the whole world flocked to Treasuries for safety.

Uncle Sam isn't the only borrower taking advantage of cheap money. IBM issued three-year bonds last week at the unheard-of rate of 1 percent. Johnson & Johnson sold $550 million of 10-year bonds on Friday at 2.95 percent, a record low for that maturity.

For investors, such rates aren't very enticing.

Remember that you own bonds for safety, Colbert advises: "Can you make a lot of money? No. It's 2, 3, 4 percent, and if you are expecting any more, you are looking in a rear-view mirror."

DeRose does recommend some long-term Build America bonds, which are issued by states and municipalities and have yields as high as 5 to 6 percent; but he warns people away from junk bonds. "The dangerous thing, what I'm worried about, is that they'll try to look for alternatives and take more risks than they should," he says.

What's bitter medicine for bond investors should ultimately be a tonic for consumers and businesses. "The good news is that this low-interest-rate environment gradually helps heal the economy," Colbert says.

As people refinance mortgages at rates that have fallen below 4.5 percent for 30 years, they'll have more money to spend on cars, clothes and other consumer goods.

Companies such as IBM should eventually take advantage of the low, low rates to expand and hire more workers.

And, eventually, the soothsayers who've been predicting higher interest rates will be right. Just not now, and not in the near future, either.