So who are they selling to? The answer, at least for now, is private demand, in other words just like in the stock market the retail investor is the final bagholder, so when it comes to US Treasuries, "private investors" both foreign and domestic are soaking up hundreds of billions in central bank holdings. We wonder if they would do that knowing who is selling to them.

Meanwhile, while just two months ago yields had tumbled to near all time lows, suddenly the picture is inverted, and long-yields are suddenly surging on concerns the BOJ, the Fed, and maybe even the ECB will soon taper their purchases of the long end.

What happens if in addition to the relentless selling from foreign official institutions, private sellers also declare a buyer's strike. The answer? More Fed monetization of US debt will be the most likely outcome, aka more QE. We bring this up because, amusingly, the Fed is still harboring some naive hope it can/will raise rates in the coming week and/or months.