Two billionaire investors make a 'U-turn' on bonds
According to renowned investors Bill Ackman and Bill Gross, known for their pessimistic forecasts on bond markets in recent years, bond yields have risen too high.
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Pershing Square Capital Management founder Bill Ackman stated in a social media post that he has closed his short position against US bonds in the face of rising global risks.
In his post on Twitter, Ackman commented, "There is too much risk in the world to remain short on bonds at current long-term rates. The economy is slowing down more than the recent data suggests."
Pimco founder Bill Gross, meanwhile, expressed that he has been buying short-term SOFR futures contracts in anticipation of a recession by the end of the year. Referring to the Fed's recent forward guidance on interest rates, Gross wrote, "The 'higher for longer' mantra is yesterday's news."
The change in position by the two famous investors comes after yields reached new highs and then experienced sharp declines.
On Monday, the US 30-year bond yield fell by 21 basis points after hitting a peak of 5.18 percent. The 10-year bond yield also saw a 19-basis-point drop after exceeding the 5 percent level on Monday for the first time in 16 years.
The Bloomberg Global Aggregate Bond Index has lost 4.8 percent this year, after falling 17 percent in 2022. These figures show that bond bears like Ackman have profited from the wave of bond sell-offs in recent years.