Billionaire hedge fund manager Bill Ackman has closed short positions in long-term United States Treasuries due to his concerns about an impending recession in the fourth quarter of 2023. Ackman believes that the U.S. economy is slowing down faster than previously indicated, and challenges faced by regional banks contribute to his view. He expressed that the world carries too much risk to maintain short positions in bonds at current long-term rates. This move aligns with the perspective of Bill Gross, the former CIO of Pimco, who encouraged his followers to invest in bonds' yield curve. The recent increase in Treasury bond yields, with the 10-year US Treasury Yield reaching a 16-year high, negatively impacted risk-on assets like equities, bonds, and cryptocurrencies, prompting investors like Ackman to shift their positions.
While many market observers anticipate further yield increases, Gross and Ackman are scaling back their bets on rising yields, believing the time is right for this adjustment. They view the previous mantra of "higher for longer" as outdated, as bond supply is expected to rise above 6%. Their perspective aligns with that of Professor Jeremy Siegel from the University of Pennsylvania's Wharton School, who sees higher long-end rates as tightening conditions even without the Fed raising short-term rates. He suggests that the recent comments from Fed officials hint at another rate pause by the central bank.