Even if the Fed decided to lean decisively dovish this week, it may not matter. The die may be cast.

US monetary policy is “likely already past the point of no return,” JPMorgan analysts led by Marko Kolanovic said Monday, in a fatalistic-sounding note.

They can hardly be blamed for adopting a cautious cadence. Events in the banking sector presage tighter lending standards and a higher cost of capital at best — at worst, this is an existential moment for all but the largest banks, and even one of those had to be rescued over the weekend.

“A soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending),” Kolanovic went on, adding that “the possibility of a Minsky moment in markets and geopolitics has increased.”

He mentioned the Saudi-Iran truce brokered by China, an event which was lost in last week’s never-ending financial crisis headlines. If you didn’t read my quick assessment of the Xi Jinping-facilitated restoration of diplomatic ties between Riyadh and Tehran, I encourage you to do so here.

Kolanovic’s take on Monday was overtly cautious, above and beyond the leery intonation that’s defined his missives since late last year.

“Concerns are rising that the speed of the current adjustment is itself a source of instability and even if central bankers successfully contain contagion, credit conditions look set to tighten more rapidly because of pressure from both markets and regulators,” JPMorgan said, of banking stress. They mentioned rates vol, and the dramatic surge in the MOVE, which spiked to the highest since Lehman.

To recapitulate from last week, the jump shown in the visual will be hard to sustain, but the point is that this is the kind of erratic behavior which, when exhibited by the most important (and supposedly most liquid) market on the planet, has the potential to cause problems.

Suffice to say the deepest market on Earth isn’t so deep these days. Liquidity is problematic across assets, but when market depth is impaired in Treasurys, it’s vexing. Market depth and volatility are inversely correlated, something Kolanovic and co. underscored Monday.

“This sharp rise in rate volatility has created a vicious cycle of lower liquidity feeding into volatility given market makers’ trading models tend to respond quickly to changes in vol,” the bank said.

JPMorgan’s market depth metrics for bond futures “collapsed” (their word) last week to record low levels.

As for equities and credit, volatility looks relatively “complacent,” which JPMorgan sees as another reason to “stay cautious on risk assets,” which still aren’t pricing in high odds of a downturn.

“Perhaps with the exception of base metals and European credit, overall there is not enough probability of recession priced,” the bank cautioned. “And clearly the banking crisis, which has spilled over to Europe, is raising the prospect of a recession this year as banks turn defensive and restrict credit.”

Yes, “clearly.”