Bill Ackman lays out a series of reasons why he's betting rates keep rising — How you can play along


Bill Ackman, a hedge fund investor, said on Thursday that he believes long-term Treasury rates will continue to increase. They could reach levels not seen before the Great Financial Crisis. Ackman stated on X Thursday night that he has swaptions in his portfolio to bet against long-term bond yields. On Friday morning, the 30-year Treasury yield traded at 4,575% after reaching its highest level since 2011. Yields are opposite to price. US30Y YTD Mountain The 30-year Treasury yield reached a new record high on Thursday. Ackman stated that, due to the resurgence of labor movements and high energy costs, he didn’t believe the Federal Reserve would be able to bring inflation down to its target of 2%. Ackman also cited the government deficit as well as a decline in demand for Treasury bonds by foreign buyers, both of which he believes will cause bond prices to fall. “The world has changed structurally since the end of World War II. Peace dividend has disappeared. Outsourcing production to China has no longer had a deflationary effect on the long term. The bargaining power of workers and unions continues to increase. Ackman stated that strikes are common and more will follow as walkouts result in substantial wage increases. Ackman believes that 5.5% is a more rational rate for the 30-year Treasury. The 30-year Treasury hasn’t consistently traded above 5 percent since 2007. “When investors saw the ‘opportunity’ to lock in 4% for 30 years, they grabbed it as a ‘once-in-their-career opportunity,’ but today’s world is very different from the one they have experienced up until now,” Ackman said. Investors can mimic Ackman’s bet by using several ETFs. VettaFi reports that the largest inverse bond ETF, ProShares UltraShort (20+ Year Treasury ETF) is TBT. The fund aims at returning two-times inverse to the daily movement of the ICE U.S. Treasury Bond 20+ Year Index. Investors need to be aware that due to the ETF being a daily fund, the performance will not be exactly two-times the inverse of the index. ProShares offers the Short 20+ Years Treasury ETF TBF, a fund that is one-times inverted. Ackman included a caveat at his end of the post. “But I might be wrong.” “AI might save us,” said he. Bill Ackman, Founder and CEO of Pershing Square Capital Management, will speak at the CNBC Delivering Alpha Summit on September 28.1001010