Bill Ackman: ‘5.5% is appropriate yield for 30-year Treasurys’

on Sep 22, 2023
  • Billionaire investor Bill Ackman is betting against long-term bonds.
  • He expects inflation to remain well above the Fed's 2.0% target.
  • The 30-year Treasury yield is approaching 4.6% at writing.

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Bill Ackman is convinced that long-term Treasury yields could still push a bit further to the upside – possibly to levels last some fifteen years ago.  

Ackman expects inflation to remain high

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The billionaire investor is convinced that several factors including elevated energy prices will keep inflation well above the Fed’s 2.0% target especially now that the U.S. autoworkers are on strike for a wage increase.

Government deficit and a weaker foreign demand will continue to weigh on the long-term bonds as well, Ackman added. Expectations of one more rate hike by the end of this year also factored into his forecast.

The long-term inflation rate plus the real rate of interest plus term premium suggests that 5.5% is an appropriate yield for 30-year Treasurys.

The 30-year Treasury yield is approaching 4.6% at writing.

Ackman is short on long-term bonds

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On X (formerly Twitter) – Ackman also confirmed today that he has turned to swaptions to bet against the long-term bonds.

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