NEW YORK (CNN/Money) - With the big-time reversal in bonds recently, investors are beginning to wonder whether the run is finally done.

Treasurys have rallied hard over the past three years, pushing the yield on the 10-year note from 6.79 percent in early 2000 to a 45-year low of 3.11 percent just a couple of weeks ago. Now that yield has kicked on up to 3.47 percent. By many lights that's still ridiculously low, a rate that implies the U.S. economy is going to be bogged down for a damn long time. Some have even professed the Treasury market a bubble.

The Fed, which has been at pains to maneuver long-term rates lower, would prefer that you not think such thoughts. With good reason, it turns out. As Treasurys shifted lower this year, so too have corporate bond yields and mortgage rates.

These lower borrowing costs have had a profound effect on the economy. There has been a surge in corporate debt issuance, most notably the $16.5 billion in bonds General Motors' is putting out to help shore up its ailing pension plan. New mortgage and mortgage refinancing activity have touched record highs.

If bond yields start heading significantly higher, all that manna goes away. Companies can't tap the debt markets to fix their balance sheets anymore, which means they have to syphon off money that might othewise be spent on hiring workers or buying equipment. Housing, one of the few things the economy has had going for it, runs into trouble.

"Rising bond yields would hurt the housing market," said Northern Trust chief U.S. economist Paul Kasriel. "Unless incomes pick up to offset higher financing, you're going to have a problem."

Worse still, rising rates would put the banks and financial institutions that have been loading up (like crazy) on the tradable baskets of mortgages called mortgage-backed securities into a serious pickle. And when banks get into pickles they become suddenly far more reticent about lending money.

These are all blows the economy might be able to take if it had already clawed its way back to sustainable growth. What does sustainable growth look like? Businesses shelling out money for new equipment. Employment rising. A whiff of inflationary pressure. We ain't there yet.

Because we ain't there yet, a significant rise in long-term rates would put the hex on the nascent recovery.

"This is a very fragile recovery process," said Morgan Stanley economist Bill Sullivan. "It's been reliant on these low borrowing costs. If we remove them, we effectively deny the economy its support."

Pull the support away, and the economy would hit the skids again. And if that happens Treasurys will start to look awfully attractive. Rates would head right back on down.

Since one assumes there are some sharp tacks over in the bond pits, it doesn't have to go that way. That maybe a sort of governor has developed and bond investors won't let rates go any higher, since that will lead to lower rates. That would be what's best for the economy.

One certainly hopes that this is the case, because the alternative, where rates jack higher and then come crashing down to new lows, wouldn't do anybody a lick of good.