The 10-year Treasury is having its worst run in over 100 years. Why investors are buying bonds anyway.

The 10-year Treasury note is experiencing its worst stretch in over a century, with yields climbing sharply as bond prices fall. Prices and yields move inversely, so a sustained selloff translates into one of the most challenging periods for long-duration government debt in modern market history. For existing holders, that has meant painful mark-to-market losses.

Yet investors are still buying. The reason lies in what higher yields represent for new money: as a strategist quoted in the report put it, “The higher that yields go — for at least new money — it becomes more enticing to think about putting money into bonds.” In other words, today's elevated yields lock in higher income streams for fresh capital, even as older bonds sit underwater.

What to watch: whether yields stabilize or continue climbing, how inflation and Federal Reserve policy expectations evolve, and whether demand from income-focused buyers proves durable. The tension between past losses and future income is the central story in fixed income right now.