Bill Ackman Exits Treasury Bond Short Position, Warns Economy 'Slowing Faster Than Recent Data Suggests'

Bill Ackman, the prominent billionaire hedge fund manager, has decided to close his short position on long-term Treasury bills.

This move comes in the wake of escalating concerns about the deteriorating economy and increasing risk factors, CNBC reports.

What Happened: Ackman, the head of the Pershing Square hedge fund, announced his decision Monday on X, the social media platform formerly known as Twitter.

“There is too much risk in the world to remain short bonds at current long-term rates,” Ackman said in a post.

The economy is slowing faster than recent data suggests.

— Bill Ackman (@BillAckman) October 23, 2023

In August, Ackman shared his bearish outlook on 30-year Treasury bills, predicting a surge in long-term inflation. His prediction turned out to be profitable, with the 30-year Treasury yield climbing by over 80 basis points since the conclusion of August.

Recent economic indicators hint at a speedier-than-anticipated economic slowdown, Ackman said Monday.

"There is too much risk in the world to remain short bonds at current long-term rates". He further highlighted that the noticeable effects of extensive monetary tightening since last March are beginning to surface.

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The Federal Reserve's recent signals suggest maintaining elevated benchmark rates to address inflation. The central bank has raised interest rates to levels not seen since 2001, CNBC reported, driving bond yields past the significant 5% mark.

Why It Matters: Ackman's decision to exit his Treasury bond short comes amid an increasingly volatile global economic backdrop. His concern over the riskiness of maintaining a short bond position at current long-term rates reflects the growing anxiety among investors about the future economic trajectory.

In addition to the Fed's rate increases, the conflict between Israel and Hamas is another contributing factor.

Ackman recently criticized a declaration from Harvard University students that held Israel accountable for the recent unrest, vowing not to employ those who endorsed the statement.

As per a report by Forbes, the declaration was penned by the Harvard Undergraduate Palestine Solidarity Committee and received backing from 33 student groups at the university.

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