The 10-year Treasury yield is approaching 5%. Strategists say how it gets there matters more than the number itself. They said this with straight faces.
Nobody cares how you got to the party. You're either at the party or you're not. But bond market analysts need to justify their employment so they invented a framework where the journey matters more than the destination. It's like saying the specific route your Uber driver took to the airport is more important than whether you caught your flight.
The yield last touched 5% in October 2023. That was eleven months ago. In those eleven months retail traders have convinced themselves they understand duration risk because they watched a YouTube video. They do not understand duration risk. They think it means how long they have to hold the bond before they can buy a jet ski.
The drivers behind higher yields could be inflation expectations. Or term premium. Or fiscal concerns. Or supply and demand. Or Mercury in retrograde. Strategists rotate through these explanations like a drunk person trying different keys in their front door. Eventually one will fit and they'll claim they knew it all along.
Here's what matters: the number goes up or it goes down. That's it. That's the whole story. Everything else is astrology for people with Bloomberg terminals. You could replace every bond strategist with a magic 8-ball and get the same predictive accuracy at a fraction of the cost.
The narrative will change six times before the yield actually hits 5%. Then it will change six more times explaining why it got there. Then it will change again when it drops back to 4.7%. The only constant is that retail traders will lose money on every leg of the move because they traded based on someone's explanation instead of the chart.
The how doesn't matter because you can't trade the how. You can only trade the what. And the what is just a f*cking number on a screen.
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