Sixty years ago this month, James Bond made his North American film debut in the movie, Dr. No (here). Last month, I watched it once again on HBO Max. While many of the Bond films now come off as corny and crude, actor Sean Connery was anything but, and made James Bond the iconic character he remains to this day. Connery was Bond—cool, calm, collected … and unmatched by all who followed in his footsteps.
As a young boy, I was transfixed by James Bond … also actress Ursula Andress (here), the ‘Bond girl’ who piqued my early interest in gender studies. I decided that as soon as I was tall enough, I too would live the life of a secret agent. But time and reality eventually placed me in a desk job. As a consequence, for the past forty years the main ‘Bond’ in my life has been the 10-year Treasury note, aka ‘Mr. Bond’. While the sexy femmes fatales of the stock market usually draw the spotlight, the serious-minded 'Mr. Bond’ is the one to watch. Treasury yields influence economies and financial systems around the world, and affect the prices of pretty much everything: stocks, real estate, other bonds, mortgages, loans, etc. When Goldfinger—a timely title in retrospect—hit the screen in 1964, the 10-year yielded 4.2%. By the time For Your Eyes Only rolled out in 1981, eye-rolling inflation had driven the 10-year yield past 15%. Between the two movies, the stock and bond markets were savaged. The price of gold, however, raced ahead like an Aston Martin on an Alpine road (here).
Sadly, Sir Sean Connery died in 2020. One year later, the movie No Time to Die premiered, ending with the apparent death of Agent 007. Hopefully these events are not previews of coming attractions. Today’s plot includes the return of ‘Mr. Bond’s’ old nemesis, inflation, along with other hulking adversaries—our national debt and deficits. The more immediate concern: Mr. Bond is staring down the barrel of yet another debt-ceiling resolution. While the debt ceiling does not cap future government spending, it does restrict the Treasury’s ability to pay the bill for expenditures already made by Congress. Failure to pay one’s bills is never good for one’s reputation or FICO score.
Taking a default bullet would no doubt be traumatic for Mr. Bond, as well as economies and financial markets around the world. Who will step forward to save the day? Can Fed Chair Jerome Powell—an old man better suited for the role of “M” or “Q”—defeat inflation and keep ‘Mr. Bond’ alive? Grab your popcorn. The grandstanders and demagogues in Congress didn’t get there by majoring in finance. Hopefully, cooler heads at the Fed and Treasury can convince them that, where Mr. Bond is concerned … there is no time to die.
Any opinions are those of James Aldendifer and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of the strategy selected.
