It might be time to buy the bonds. I don’t know. Not investment advice. Do your own research. And so on.

Disclaimers aside, the US long-end’s very close to oversold in my view. All it’s going to take to get a decent rally is a growth scare.

I should quickly — and emphatically — note that I’m not prejudging the December jobs report. I don’t have a better read on that than anyone else, and it goes without saying that an upside surprise (or even just a firm NFP headline with a downtick on the jobless rate) would go a long way towards validating the long-end’s most recent trials and tribulations.

On Wednesday, the (somewhat eccentric) 20-year breached 5%, as illustrated below. The 20-year’s a quirky security, so it’s not unusual that it’d be the first to clear the 5% threshold — i.e., ahead of the long bond, which’ll probably get there too before dip-buyers materialize or growth stutters.

30-year yields were as high as 4.97% ahead of Wednesday’s $22 billion auction, which BMO’s Vail Hartman noted was “set to clear at a cheaper level than the October 2023 offering, making it the highest yielding 30-year auction in the post-GFC era.”

I’ve been over and over the fundamental drivers of the selloff, but I’ll continue to argue that USD duration retains much of its traditional safe-haven appeal even in consideration of structural macro shifts, pervasive fiscal concerns and, yes, pressing questions about the rule of law in America.

That latter point’s worrisome for the political scientist in me, but market participants and international investors don’t take it especially seriously yet, and even if they did, it’s not exactly as if there are a lot of great alternatives, particularly at a time when pretty much every major Western democracy’s experiencing a crisis of governance.

As the figure shows, the selloff looks stretched at this juncture. There are any number of catalysts which could see it extend, but recall that the last time USTs looked like a falling knife (in October of 2023), bonds proceeded to rally sharply over the next two months.

Of course, this isn’t October of 2023. This is January of 2025, and all that means for the US and the world with Trump set to take the reins again in two weeks.

“We’re all too cognizant that investors remain jittery as headlines regarding Trump potentially declaring a national economic emergency is an effort to provide legal justification for broad-based tariffs early in his presidency. Confirmation of such an agenda would further contribute to the duration selloff,” BMO’s Ian Lyngen remarked, commenting on reports that Trump might resort to the IEEPA end-around to claim unilateral authority to implement sweeping import duties.

Trump may or may not offer tariff relief on a country-by-country basis, and terms for any relief that is ultimately granted will vary. One way to avoid tariffs altogether is to become a part of the United States, and Trump appears at least somewhat serious about reviving American imperialism.

“Financial markets are once again subject to the Trump-inspired ‘what if’ trading environment as reports of tariff strategies are accompanied by thoughts of the US purchasing Greenland, absorbing Canada and exerting more control over the Panama Canal,” Lyngen went on. “If nothing else, it promises to be a volatile next several months.”

I wonder how much demand there is for US special bond issuance with the proceeds earmarked for the purchase of the world’s largest island.