For several years now, many economists have been forecasting an end for the bull bond market that began in 1981, but the market has continually confounded those expectations.

In recent months the bearish call for bonds has grown louder as the Federal Reserve made clear its intention to raise interest rates by year-end. But the financial carnage of the last couple weeks may have put the Fed on hold, and investors are now flocking to government bonds as a safe haven.

The 10-year Treasury fell to a three-month low of 1.91 percent Monday and recently stood at 2 percent.

"Bond bears have misread economic growth. They have misread inflation data," Bob Andres, chief investment officer of Andres Capital Management, told The Wall Street Journal. “I think the U.S. economy will be in a slow-growth mode for longer than most observers believe.”

GDP grew a mediocre 2.3 percent in the second quarter, and the Atlanta Fed's forecasting model puts third-quarter growth at just 1.3 percent. Meanwhile, the Fed's favored inflation gauge rose only 0.3 percent in the 12 months through June. That's far below the central bank's target of 2 percent.

Many experts maintain the Fed should refrain from boosting rates now. Former Treasury Secretary Larry Summers is one of them.

"A reasonable assessment of current conditions suggests that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives: price stability, full employment and financial stability," the Harvard professor writes in The Washington Post.

Unemployment held at a seven-year low of 5.3 percent in July.

Rate hikes would hurt employment by encouraging companies to hold on to cash rather than investing in new employees, Summers says. And with financial markets in free fall, a rate rise is no longer necessary to ensure financial stability.

"At this moment of considerable fragility, the risk is that a rate increase will tip some part of the financial system into crisis with unpredictable and dangerous consequences," he states.

It appears more likely that the economy faces secular stagnation or a savings glut rather than temporary headwinds, Summers says.

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