Jim Bianco has some interesting charts and a corresponding explanation for the surge in 10-year Treasury yields.

Bianco has a Series of Charts comparing Polymarket betting odds to bond yields, the stock market, Bitcoin, and other things.

In August the election betting market and the bond market were negatively correlated, and very strongly so.

Now they seem strongly correlated in a positive sense.

Bianco says “Arguably, the most significant impact is on the bond market. The higher Trump betting goes, the higher 10-year yields go. Trump will stimulate growth (cutting taxes and regulation) and potentially create more inflation (tariffs).”

I agree with Bianco that Trump will stimulate more inflation if he carries out his tariff plan. But is that what’s suddenly driving the market?

My answer is no.

Economic Charts vs Bond Market Yields

I used Nate Silver’s election odds instead of Polymarket, but the key point is economic reports correspond to three consecutive yield surges to the day.

On September 18, when it was touch-and-go, the Fed cut by 50 basis points. Long-term yields did what I expected on that move.

On Oct 1 (no news) Trump’s odds were 44.7 percent. The odds dropped a tiny bit to 43.6 percent on Friday, October 4. That’s when we got a much hotter than expected jobs report. Yields surged on the jobs report.

Between October 11 and October 16 bond yields fell by 14 basis points as Trump’s odds rose from 47.7 percent to 49.4 percent.

On October 11, Polymarket had Trump’s odds as 54-46. On October 16 it was 59-41 with bond yields dropping 14 basis points. So both Polymarket and Nate Silver’s odds were negatively correlated for 5 days.

It is not until the October 21 surge where I struggle to find a same-day news explanation that matched rising yields. However, there are many possible economic explanations including runaway budgets no matter who wins the elections.

In short, I agree with Bianco’s inflationary tariff thesis but the surge in bond yields has a direct, same-day correlation to three key economic reports.

Spotlight Trade Policy

September 26: Trump Claims Tariffs Will Reduce the Trade Deficit. Let’s Fact Check.

October 5, Buy American Provisions Cost $125,000 Per Job Created

October 20: Trump Disavows His Own “Best in History” USMCA Trade Deal

Betting Odds

October 27: I Challenge Nate Silver to an Election Bet, Winnings Go to Charity

I believe Silver has overrated the odds of a Harris win, especially her odds of a clean sweep in the battleground states.

Click above to see my bet proposal.

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