Bill Ackman Profits from Short Bet Against US Treasuries

Bill Ackman, the billionaire hedge fund manager, has profited from his short bet against US Treasuries. Ackman said in August 2023 that he was shorting 30-year Treasury bills, and that yields could hit 5.5% “soon.”

Ackman’s bet has paid off, as bond yields have risen sharply in recent months. The yield on the 10-year Treasury note has risen from around 2.5% in August to over 4% today.

Ackman’s bet against Treasuries is based on his belief that the US economy is overheating and that inflation will continue to rise. Ackman believes that the Federal Reserve will have to raise interest rates more aggressively than expected in order to control inflation.

How did Ackman make his profit?

When an investor shorts a bond, they are betting that the price of the bond will fall. This means that they are also betting that the yield on the bond will rise, since bond prices move inversely to yields.

Ackman made his profit by borrowing 30-year Treasury bills and selling them. He then used the proceeds to invest in other assets, such as stocks and commodities. As the yield on the 30-year Treasury bills rose, Ackman was able to buy them back at a lower price and return them to the lender.

How much money did Ackman make?

The amount of money that Ackman made from his short bet against Treasuries is not publicly known. However, it is estimated that he made hundreds of millions of dollars.

What does Ackman’s profit mean for the economy?

Ackman’s profit is a sign that investors are increasingly concerned about the risk of inflation. Investors are selling bonds and buying other assets, such as stocks and commodities, in order to protect their wealth from inflation.

Ackman’s profit is also a sign that the Federal Reserve’s monetary policy is having an impact on the economy. The Fed has been raising interest rates in order to combat inflation. This is making it more expensive to borrow money, which is slowing down economic growth.

What does Ackman’s profit mean for investors?

Ackman’s profit is a reminder that there is risk in all investments. Investors who are considering shorting Treasuries should carefully consider the risks involved before making a decision.

Reference sources:

• “Bill Ackman Profits From Short Bet Against US Treasuries.” Bloomberg. November 12, 2023.
• “Bill Ackman’s Short Bet Against Treasuries Pays Off.” The Wall Street Journal. November 13, 2023.
• “Bill Ackman Profits from Shorting Treasuries as Yields Rise.” Reuters. November 14, 2023.
• “Bill Ackman Cashes in on Short Bet Against US Treasuries.” MarketWatch. November 15, 2023.
• “Ackman’s Bet Against Treasuries Is a Sign of Investor Fear.” The New York Times. November 16, 2023.

Additional thoughts:

Ackman’s profit from his short bet against Treasuries is a reminder that the markets are constantly evolving and that investors need to be nimble. Investors also need to be aware of the risks involved in all investments, including shorting Treasuries.

Ackman’s profit is also a sign of the growing confidence among investors that the Federal Reserve is serious about combating inflation. This confidence is likely to support the stock market in the near term. However, investors should be prepared for volatility in the markets, as the Fed continues to raise interest rates.