Pershing Square Holdings' Bill Ackman cuts bet against 30-year US Treasuries

investmentweek.co.uk:

The hedge fund manager first disclosed his short position in 30-year Treasuries in August in the expectation of long-term rates increasing.

Founder and CEO Bill Ackman wrote on X, formerly Twitter, on Monday (23 October): «We have 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.»

The move came after the 10-year US Treasury yield climbed to the 16-year high of 5.02% yesterday, according to data from MarketWatch, as concerns grew over the central bank's higher for longer narrative. The yield on the 30-year US Treasuries went as high as 5.175%.

The hedge fund manager first disclosed his short position in 30-year Treasuries in August in the expectation of long-term rates increasing and, at the time, believed inflation would remain persistently high as wage growth remains elevated. 

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In the trust's interim report released in August, Ackman said inflation may stabilise at 3%, which could lead to Treasury yields exceeding 5.5%.

In a research note published today (24 October), Numis analysts Ewan Lovett-Turner, Gavin Trodd and Ash Nandi said they expected the trade had been profitable up to the point of closing the short. 

«Bill Ackman has an exceptional record in hedging against significant macro risks, and therefore his views are closely watched by the market,» they said. 

«The hedging both generates absolute returns for PSH at times that are often difficult of equity markets and also generate cash at opportune times, enabling reinvestment in the portfolio at attractive valuations.»

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