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B. G., Opalesque Geneva: Bill Ackman, the founder of Pershing Square Capital Management, declared that his firm would be shorting 30-year Treasuries using options, in light of the low long-term rates - which might lead to a persistent 3% inflation -, Ts being overbought, and other events such as Japan's YCC and the recent Fitch downgrade.
His firm is now short in size of the 30-year T, first to hedge the impact of higher long-term rates on stocks, and second because it is a high probability standalone bet. "There are few macro investments that still offer reasonably probable asymmetric payoffs and this is one of them," he said.
In a post on the social media platform Twitter/X, he said he was surprised "how low US long-term rates have remained in light of structural changes that are likely to lead to higher levels of long-term inflation including de-globalization, higher defence costs, the energy transition, growing entitlements, and the greater bargaining power of workers." He added that might lead to a persistent ~3% inflation.
US Long-Term Interest Rates were at 3.81% on 31 July 2023, compared to 3.75% the previous month and 2.90% last year. This is lower than the long-term average of 4.49%, according to YCharts.com. ...................... To view our full article Click here
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