The pain trade is on. Bond-market bears such as Pacific Investment Management Company, manager of the world's biggest bond fund, have disconcertingly seen US Treasury yields fall sharply. With the economy slowing, there could be further pain ahead. Even the end of the Federal Reserve's bond purchases may not push yields higher. But longer-term, the bears are likely to be proved right: there is little or no value in the market.

Yields on 10-year Treasurys are now at 2.97%, down 0.75 percentage point from the high for the year. The latest lurch lower came as global manufacturing data showed the economic expansion slowing and the European debt crisis continued to cause risk aversion. Nomura Holdings thinks a move to 2.75% is possible; last year Treasury yields bottomed at just below 2.4%.