If you don’t like to talk about bonds, you’re at wits’ end by now.

The financial pages are littered with chronicles of what, at this point, counts as the most dramatic long-end US Treasury selloff in a generation.

If you bought a long-end ETF in 2020, you bought the Nasdaq in 2000. Or the S&P in 2007. Or the Shanghai Composite in early June of 2015. Or tickets for the Titanic.

I used an S&P index to illustrate the magnitude of the drawdown in “What’s Behind The Bond Bear?.” The figure above shows the same simple drawdown calculation using Bloomberg’s longer-dated bond gauge.

This is, without exaggeration, a meltdown and, most probably, a dip-buying opportunity. However, as I’ve endeavored to make crystal clear in recent days, this is also a textbook falling knife. And I’m not your fiduciary. As sure as this (the selloff) is an epic moment in market history, this (article) is not investment advice.

But, I’d gently note that the rout can’t go on in perpetuity. The unrealized losses imperil balance sheets, and beyond that, 10s that rise above (let alone stay above) 5% will tighten financial conditions significantly, which is a circuitous way of saying the selloff is sowing the seeds for its own reversal. This will reverberate not just in markets, but across the real economy at a time when the US consumption impulse may be poised to slow.

“FCI tightening is doing ‘invisible hand’ work for the Fed, but almost too well, as again, you’re really starting to mess with the cost of money, enormous unrealized losses inside the financials / banks space and the broad collateral chain as the untethered fiscal deficit spending and forward US government funding realities (plus perpetual political dysfunction) move markets closer to an eventual ‘come to Jesus’ moment,” Nomura’s Charlie McElligott said.

The figure above gives you some context for the ongoing long-end “repricing,” which at this point feels a bit euphemistic as a description of the move.

In “Bond Vigilantes May Be Wearing Out Welcome,” I walked through a number of the factors behind the price action. On Thursday, BMO’s Ian Lyngen and Ben Jeffery presented a more innocuous explanation. “The narrative that ‘the recession is just over the horizon’ has grown tiresome, leading to a collective disinterest in buying the dip in Treasurys,” they wrote. “The resulting backup in rates has been more a function of a buyers’ strike than any paradigm shift in the fundamentals.”

For their part, TD’s Gennadiy Goldberg and Molly McGown doubt 10s could stay above 5% for long unless the market gave up on rate cuts in 2024 entirely. Still, they were cautious about stepping in front of the move. “In the near-term, bearish momentum and FX intervention fears could keep rates higher,” they remarked.

Rabobank, meanwhile, offered a characteristically colorful take on some of the recent price action in what’s supposed to be the deepest, most liquid market on the planet. “This is the primus inter pares of global bond markets which everyone everywhere in the world has to look to for the cost of borrowing,” the bank said. “And it’s trading like a penny stock.”