“The risk of short selling bonds at the current long-term interest rate is high, so liquidation”
Bill Gross: ‘There is a high possibility of a recession by the end of the year’
With U.S. Treasury yields exceeding 5% at one point during the session, U.S. Wall Street tycoons predicted that the U.S. economy would slow down within the year.
According to CNBC on the 23rd (local time), hedge fund giant William Ackman, chairman of Pershing Square, said through It was announced that all short selling positions had been liquidated.
Chairman Ackman explained the background to short selling, saying, “The economy is slowing faster than recent data suggests.” An economic slowdown typically leads to lower bond yields.
Jerome Powell, chairman of the U.S. Federal Reserve, recently assessed that inflation is still too high and that the economic growth rate must be lowered further to lower it.
Recent indicators show inflation is well above the Fed’s 2% target, but the annual pace of increase has slowed. The annual growth rate also slowed from over 9% in June last year to 3.7%.
Previously, Chairman Ackman announced in August that he was short selling 30-year U.S. Treasury bonds, saying that bond yields would rise based on “prolonged high levels of inflation.”
The yield on 30-year government bonds has risen 80bp (1bp=0.01%) since the end of August. Bond prices are inversely proportional to yields, so CNBC assessed that Chairman Ackman’s bet was in fact a gamble against rising interest rates.
After Chairman Ackman’s remarks that day, the yield on 30-year government bonds fell 6 basis points to 5.01%.
Bill Gross, co-founder of Pacific Investments, a bond investment company known as the ‘Bond King’, also analyzed through
“The local banking massacre and the recent long-term record high in auto delinquency rates show that the U.S. economy is slowing significantly,” Gross said. “Prolonging high interest rates has become yesterday’s mantra.”
Previously, JP Morgan CEO Jamie Dimon also warned on the 13th that “this could be the most dangerous time in decades” due to the various threats the world has recently faced.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.