The title of the taping is the thesis. The Bond Market Blowout Scott Bessent Can’t Prevent.
Macleod’s first instrument is not gold. It is the 10 year. “The key thing that we’re all watching at the moment is bond yields. They are going higher. It’s as simple as that. And led readily by the United States.”
Britain, France, Germany, and Japan have their own mess. “America is the real problem.”
The 10 year is still sold as the risk free standard. “There’s an awful lot of risk in there.”
That’s the immediate problem. Behind it sits the Iran war, diesel, jet fuel, and bunker prices, Ukraine grain off the board, a ruined European harvest, and reports that Russia is no longer a diesel exporter after refinery hits.
“The price of everything is going to rise because of the distribution costs.”
Two or three months ago the consensus still dreamed of a glide back to 2 percent. “This is crazy. That’s not going to happen.”
Then he named the trap. “These nations are in debt traps and the problem with the debt trap is that when the bond yield rises, when the cost of government funding rises, it makes the trap worse. You get into sort of payday loan territory.”Who lends to Washington at 6 or 7 percent once the slump cuts the tax base that is supposed to back the bonds? “The rate goes up and the higher the rate goes, the worse the situation is. So not only has it gone up, but it’s got to go up again and again.”
He walked the US 10 year through 5 percent and the UK gilt near 5.27 percent and said the path is 6, 7, 8 percent. On the show he also floated the number that will travel. Yields could go to 10 percent, even 20 percent, once the trap is closed.
Bessent’s buybacks do not impress him: “What is Bessent going to do? I mean he’s just going to have to print print print.”A slump plus a financial crisis plus a collapsing equity market leaves one job. “He’s going to have to try and do what he can to rescue the whole kaboodle.”
Politicians will not take the pain. “There will be no discipline on the politicians.” The dollar, in his framing, is “a fear currency. Its value is anchored to absolutely nothing.” When yields keep soaring and the debt cap tightens, that currency is what gives.
Central banks, he said, will abandon the inflation target because “keeping a show on the road is just so much more important.” QE returns.The private sector slumps while prices rocket because purchasing power is falling. “I think we’re seeing the end of the fiat currency system rapidly coming.”
People who give the system five or ten years are, in his view, late. “No way. I think this could be 18 months, two years before it’s all over.”
That is the line for SilverTrade. “Precious metal prices are going to go a lot higher which reflects not precious metal values going higher but compared with commodities the purchasing power of currencies going down very substantially even halving in the not too distant future.”
Geopolitics is the second engine. “Everybody’s got dollars.”He argued America is being pushed out of the Middle East and that European politics is turning against Washington. The bond market is pricing more than a coupon. It is pricing a reserve asset whose political franchise is shrinking while its interest bill is exploding.
SilverTrade does not need Macleod’s two year clock to be exact. It needs the order of operations. Yields rise first. Equities are the bubble that pops when duration dies. Buybacks are a press release. Printing is the only remaining tool.Gold and silver are not a moonshot in that script. They are the measuring stick for a currency he says is about to be spent without discipline.
Bessent can call himself the house. Macleod’s point is that the house is already paying payday loan rates on a tax base that shrinks when the slump arrives.
