Billionaire investor Bill Ackman is no longer betting against US Treasurys, citing too much risk in the world – DIGIWIZ CENTRAL

Billionaire investor Bill Ackman is no longer betting against US Treasurys, citing too much risk in the world

Bryan Bedder/Getty Images/The New York Times

Billionaire investor Bill Ackman has closed his profitable short bet against US Treasurys.Ackman first disclosed hit bet against Treasurys in August, as he expected interest rates to keep moving higher.“There is too much risk in the world to remain short bonds at current long-term rates,” Ackman said.

Billionaire investor Bill Ackman has closed his profitable short bet against US Treasury bonds.

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

Ackman disclosed his bet against US Treasury bonds in August, as he expected long-term interest rates to continue moving higher. Ackman said he was specifically betting against 30-year Treasury bonds as a hedge against “a world with persistent 3% inflation.”

Ackman’s short bet has proven to be profitable, as interest rates have surged since he made the disclosure on August 2. Since then, the 10-year US Treasury yield has jumped from about 4.08% to as high as 5.02% on Monday. Meanwhile, the 30-year US Treasury yield has increased from 4.17% to as high as 5.18% on Monday.

Bond prices move in the opposite direction of bond yields, so the swift rise in bond yields over the past three months has led to a sharp decline in the price of the securities.

To get a sense of the Treasury decline that Ackman was able to capture as profit, take a look at the iShares 20+ Year Treasury Bond ETF, which has declined 15% since Ackman announced his short bet. The decline would have been even bigger for 30-year US Treasury bonds, as longer-duration bonds are more price sensitive to moves in interest rates.

While Ackman didn’t specifically highlight the growing risks he is worried about, a lot has happened since he launched hit bet against US government debt.

War has broken out between Israel and Hamas, leading to a growing risk of a broader conflict in the Middle East, labor strikes have occurred and are ongoing at the big three US automakers, and a leadership crisis in the US House of Representatives has led to ongoing uncertainty about a potential government shutdown in November.

If these risks reach a breaking point, they could fuel a safety trade that would likely see investors pile into US Treasury bonds, potentially sending interest rates lower and bond prices higher. Ackman decided to take his profits and close the bet rather than wait for such an event to happen. 

The legendary hedge fund investor isn’t alone in his view of the growing global risks. Earlier this month JPMorgan CEO Jamie Dimon said “this may be the most dangerous time the world has seen in decades.” 

Read the original article on Business Insider
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