Markets were awake Monday to the possibility that trading the US election based on betting odds was folly.

Maybe the probabilities reflected on betting websites — which generally showed a surge in Trump odds last month — will prove prescient maybe they won’t, but it was never obvious to me why professionals operating in ocean-deep markets for the world’s most important financial assets should take their cues from what, in some cases, are paper-thin markets for election betting, where someone with a few million dollars counts as a “whale.”

Consider this: These betting sites are also home to markets for crucial questions like, “Next James Bond actor?”, “Will Playboi Carti release a new album in 2024?” and “Will Biden pardon Diddy?” If I’m trading Treasurys for a living, I’m not sure I’m getting my information from those sites, because how do you explain that after the fact if you’re wrong? “Well, if the Playboi Carti fans don’t know, who does?”

Admittedly, traditional polling’s pretty useless in the Trump era, and if you believe in crowd-sourcing, there’s a lot to be said for the idea that bettors, as a collective, know more than any bookmaker. Still, I question the relative wisdom of positioning a large book (and here I mean a book of positions, not a book of gambling business) based in whole, or in any large part, on the “wisdom” of those particular crowds.

The figure below, from BMO’s Ian Lyngen and Vail Hartman, shows 10-year breakevens with presidential betting odds. “The betting markets largely favored a Harris victory during the August-September period, until the pendulum of sentiment swung convincingly back in favor of a Trump win as the autumn got underway,” they wrote. “Along with this shift, the global trade implications have become particularly relevant with a Trump victory widely seen as leading to more aggressive tariffs and an attempt to reshape international commerce.”

What you’re seeing in breakevens is a market concerned about the inflationary implications of Trump’s “pro-business agenda, tax cuts and a fresh round of tariffs,” as Lyngen put it.

On Monday, some of those “red” trades reversed or anyway gave some back following the weekend release of a “stunning” (to use the adjective employed by pollsters around the country) Des Moines Register poll showing Kamala Harris ahead in Iowa. Subsequently, the final New York Times/Siena poll suggested the two are neck-and-neck in Georgia, Michigan and Pennsylvania. Trump led in Arizona and Harris in North Carolina, Nevada and Wisconsin.

The fallout from the Des Moines Register poll was pronounced in the dollar, which slipped the most since Jerome Powell’s dovish Jackson Hole address and, before that, the early-August growth scare.

I realize this can be difficult for the uninitiated to follow, but the day-to-day fluctuations in various gauges of the dollar aren’t indicative of anything to do with the larger question about the dollar’s reserve currency status, America’s “exorbitant privilege” and so on. The dollar strengthens or weakens based on expectations for US monetary policy and also US yields, so in this case, what you’re seeing is some of the inflation risk perception associated with a “red sweep” coming out of the market.

Treasurys were of course bid early Monday, when 10-year yields receded by 10bps. Remember: The most bond-bullish outcome is Harris with split government.

“‘Harris (Gridlock)’ is a real soul-punch to the the recent vigilantism from bond and STIR shorts,” Nomura’s Charlie McElligott said Monday, noting that in the event of a Harris win and a split legislature, rates may evidence “a powerful bull-flattener, risking massive notional buying and covering flows thereafter, particularly from the systematic trend / CTA universe.”

I’d say “place your bets,” but… don’t. Just don’t. Not investment advice, but let’s be serious: Nobody has an inside line on this election. Betting on it — in traditional markets or alongside your best guess as to when Playboi Carti, whoever the hell he is, will hit the studio again, is just gambling. Pure, unadulterated gambling.