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Amid a sharp selloff in the bond market, players in Europe's low-yielding papers have gotten their fingers burned, big time.
It's "ugly bond math," Hans Mikkelsen, a credit strategist at Bank of America Merrill Lynch, said in a note last week. The 30-year German bund prices declined around 12 percent over a two-week period, with a 53-basis-point increase in yield, which tots up roughly 25 years' worth of yield, he calculated.
That compares with a typical high-yield bond, for which a 53-basis-point rise in yield would suggest an around 2.3 percent price fall, erasing only around a third of a year's worth of yield, Mikkelsen said. Bond prices move inversely to yields.
Bond yields have moved even further since that report was written.
Germany's bonds have taken the brunt of the selloff, with the 30-year yielding around 1.22 percent, up from 0.436 percent on April 20, while the is around 0.603 percent, up from around 0.077 percent on April 20.
That's not terribly surprising, Bastien Drut, a strategist at Amundi, said in a blog post last week.
"After more than five quarters of declining German yields, it is logical to be seeing some profit-taking," he said. "This is even easier to understand since long-term rates were quickly moving towards negative territory."
Players in negative-yield bonds are also smarting. While bondholders may hold those securities for a variety of reasons, some clearly bought in hopes their yields would get even more negative. It's essentially a buy high and sell higher play. Or in less flattering terms, it could be called a greater fool theory.
But the greater fool may have left the building. Switzerland's 10-year bond has a bid-ask spread of 0.053-0.087 percent, turning positive after trading around a negative 0.184 percent on April 20.
"For me, it has seemed strange why people would give money to a government and say 'please lose money for me and I'll take it back five years later,'" Nizam Idris, head of strategy, fixed income and currencies at Macquarie, said. "It's still saying after being in crisis for so long, the economy cannot post any nominal growth over the next 10 years."
But now the market outlook has changed, Idris said, noting that after many global central banks eased, the outlook ahead is for them to be more neutral. That suggests yields don't have much room to fall any longer.
To be sure, the reversal in yields could be temporary.
"The European Central Bank's (ECB) quantitative easing (QE) is just beginning: it is only 10.7 percent complete," Amundi's Drut said, noting around 118 billion euros ($131.56 billion) worth of bonds have been purchased out of a total 1.10 trillion euros. "In other words, 90 percent of the QE is still to come!"
In addition to expecting another 200 billion euros worth of purchases of German securities, he cited another factor likely to weigh on yields: supply and demand.
"Net issues of securities, which were positive in May, will be deeply negative in July, which will also be a downside factor for yields," he said.
Drut isn't alone in seeing a potential reversal of the selloff.
"Looser monetary policy will continue pretty much everywhere else in the world [besides the U.S.]. In particular, once it becomes clear that the Federal Reserve is not going to hike, the U.S. dollar is likely to weaken," Bob Janjuah, a strategist at Nomura, said in a note last week. "This would force the rest of the world to step up efforts to loosen policy to weaken their currencies vs the U.S. dollar. I see this as the ultimate race to zero."
Janjuah tipped the U.S. Treasury market as near a "major tactical buy level," which he puts at 2.3 percent for the U.S. 10-year bond. The 10-year is at 2.2743 percent in early Asia trade Tuesday, up from 1.8970 percent on April 20. Janjuah also says European bond markets are at "very interesting buy levels."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter