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Bill Ackman covers bet against Treasurys, says ‘too much risk in the world’ to bet against bonds

Bill Ackman, Pershing Square Capital Management CEO, speaking at the Delivering Alpha conference in NYC on Sept. 28th, 2023.

Adam Jeffery | CNBC

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Pershing Square’s Bill Ackman revealed Monday that he had covered his short position in long-term Treasury bills, as he believes a fast-deteriorating economy would suppress bond yields.

“There is too much risk in the world to remain short bonds at current long-term rates,” Ackman said in a post on X, formerly known as Twitter, Monday morning. “The economy is slowing faster than recent data suggests.”

The billionaire hedge fund manager first disclosed his bearish position on 30-year Treasury bills in August, betting on elevated yields on the back of “higher levels of long-term inflation.” The 30-year Treasury yield has risen more than 80 basis points since the end of August, making Ackman’s bet profitable. Bond prices move inversely with bond yields.

Bond yields have surged lately, with the benchmark 10-year rate topping the key 5% threshold, after the Federal Reserve signaled that it will keep benchmark rates higher for longer to fight inflation. Meanwhile, the economy and labor market had consistently outperformed expectations, keeping yields elevated.

However, Ackman believes that’s about to change as the economy started to feel the lag effects from the massive tightening measures undertaken since March of last year. The Fed has hiked interest rates to the highest level since early 2001.

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