“My Word is My Bond”, the saying goes, meaning that “One will always do what one has promised to do”. Given how badly Bonds have been trading lately, I’m not sure this motto has the same meaning anymore.
UK Gilts in particular have been a disaster, which is ironic in that “My Word is My Bond” happens to be the motto of the London Stock Exchange. Maybe they should consider changing it to something more contemporary, like “My Word is My Ponzi”.
While we are at it, maybe James Bond should also be renamed to James Ponzi:
“The name is Ponzi. James Ponzi. Agent Double-O-Seven-Per-Cent-Yield”.
And the word Bondage suddenly got a new meaning…
Ok, I will stop with the dad jokes now, since it’s all a joke anyway. I’m sure Shrubstack readers have figured this out by now.
The funny part is that when people start panicking about Bonds, usually marks a local top in Yields, until the next time they panic about Bonds.
According to “Shrub’s Law of Large Numbers”, the US 10-Year Yield will gravitate towards 5% like a magnet. But as we are heading towards the 5% level, we are getting close to “Tamagotchi Intervention” territory. Unfortunately, the new Tamagotchi has yet to take the driver’s seat and remains to be seen how he will react when tested with higher yields. I hope Tamagotchi Yellen left him the Instruction Manual on the desk, and didn’t just take it with her…
In any case, with a 5% yield on the 10-Year, the incentives are to patch things up, as always, and I wouldn’t be surprised if “they” stop the bleeding around there, with their usual bag of magic tricks.
How do we profit out of this?