Elliott’s Paul Singer Says He’s Shorting Long-Term Bonds

Paul Singer, the founder of hedge fund Elliott Management Corp., said he’s betting the price of 30-year sovereign debt in the U.S., Europe and Japan will fall.

These bonds, many with yields of about 2 percent to 3 percent, are trading at “extreme” levels because central banks have purchased a large amount of government debt, a practice known as quantitative easing, he said.

Central banks “have given every inclination to keep printing willy-nilly to solve every economic problem,” said Singer, speaking yesterday at the Skybridge Alternatives Conference in Las Vegas. At some point, inflation is likely to kick in, sending bond prices tumbling, he said.

Singer, who has run New York-based Elliott for 35 years, said it’s the same kind of trade he put on in the mid-2000s, when he bet that U.S. bank debt and subprime mortgages would fall.

“We weren’t bearish on these,” Singer said. “What we were doing was buying an incredibly cheap put option. It was insanely asymmetric,” meaning the cost was small if he was wrong, and the return could be huge if he was right.