Everyone knew it defied logic to pay for the privilege oflending trillions of dollars to European governments.

But two months ago, that didn't stop investors from doingexactly that, causing the pool of European bonds with negativeyields to soar to almost 3 trillion euros ($3.4 trillion) as ofmid-April, Bank of America Corp. data show.

That trade is now dying quickly. The amount of such securitiesin the market has shrunk nearly in half, to 1.6 trillion euros asof June 9.

So, what happened? The European Central Bank didn't back awayfrom its plan to buy more than a trillion euros of debt nor did itlift its benchmark deposit rate above zero.

Instead, investors just seem to be returning to their senses (atleast a little bit) as the euro-area shows signs of stabilizing.There are flashes of progress in Greece's seemingly endless attemptto avert default. Oil prices have rebounded, helping boost theprospects of inflation in both Europe and the U.S.

All that has led to a dramatic surge in sovereign bond yieldsand a drop in the euro-region's debt values. Yields on 10-yearGerman bonds rose to 1 percent from as low as 0.05 percent on April17 while yields on similarly-dated Swiss bonds rose to 0.3 percentfrom negative 0.3 percent on Jan. 23.

The $5.3 trillion Bank of America Merrill Lynch Euro GovernmentIndex has lost 6 percent since April 15, equal to about $300billion of market value.

Now what? Are negative yields headed for the history books,destined to be discussed in business classes as epitomizing thegreat era of central-bank experimentation?

“Certainly in hindsight, people are looking at the dip intonegative yields as an over-extension of the trade,” said IanLyngen, a government bond strategist at CRT Capital Group LLC inStamford, Connecticut. While negative yields may still exist amongshorter-term bonds for a while longer, they're unlikely to returnamong longer-dated securities anytime soon, he said.

The fate of negative-yielding bonds depends in large part onwhether the data emerging from the European economy continuesdelivering positive surprises.

After all, the only reason it makes sense to buy this stuff isif a) yields are going more negative and prices ever higher as theeconomy weakens, b) if there's a massive correction that causeshuge losses in every other type of investment, or c) if the ECBexpands its already unprecedented stimulus effort.

If recent history is a guide, the bonds that still have negativeyields are pretty unstable. So, unless investors start worryingabout deflation again, more of these securities may soon join theirformer peers as a thing of the past.

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.