On June 27th, 1973, Roger Moore appears alongside Jane Seymour in Live and Let Die, Moore’s first appearance as Agent 007, James Bond. But it is not all cocktails and exotic locales for the debonair secret agent, trouble is lurking in the Bond franchise. A few years prior, a lawsuit settlement gave the script rights to the movie “Thunderball” to a former writer and friend of author Ian Fleming. United Artists made the move in 1965 hoping to placate the disgruntled writer. It didn’t work. Fleming’s associate remakes the movie with Warner Brothers after Moore has taken over the Bond martini shaker under the title “Never Say Never Again.” Adding insult to injury, Warner casts a slightly graying Sean Connery, once again, as 007. Thus, the inevitably named “Battle of the Bonds.”
Bonds are ready to do battle again in 2020. And I’m not talking about the forthcoming release of the 25th film No Time To Die, rescheduled for November after originally being set for release in April. Investors in bonds over the last thirty years have come out on the winning end more often than not. Bond yields reached their peak on September 30th 1981 with the 10 Year US Treasury yielding 15.84%. Today that same maturity will get you a whopping 0.70%. Since bond prices rise as yields fall, bond investors have done pretty well in this environment from a total return standpoint. But what happens when the trend reverses and interest rates start to rise again? It’s very likely that some investors in “safe” US Bonds will see their principal negatively affected. Such an outcome might be, in the words of 007 after dropping a lamp into a bathtub to electrocute an assassin: “Shocking! Positively shocking!”
Don't wait for history to happen...