Bill Ackman Wins Even If This Treasury Rout Keeps Going
The investor may have left some money on the table by ending his bearish bet, but he has identified a meaningful shift in the risk-reward on government bonds.
Getting it right.
Photographer: Patrick T. Fallon/Bloomberg via Getty Images
Hedge fund billionaire Bill Ackman is covering his short position on longer-term Treasury bonds, and Bill Gross — the Pacific Investment Management Co. co-founder known as the “bond king” — said he’s buying futures tied to the secured overnight finance rate. Their moves dramatically shifted sentiment in the bond market on Monday morning, pulling yields around 13 basis points lower in the space of about two hours. They also conveyed how the balance of risks has shifted in recent days and weeks.
Let’s start with the pessimistic take. Back on Aug. 2 when Ackman, the activist Pershing Square Capital Management founder, unveiled his longer-term Treasury short position, I wrote that he may be “right for the wrong reasons.” I was skeptical of his call for “a world with persistent ~3% inflation.” My view hasn’t changed. But Ackman impeccably timed (and helped fan) a shift in market sentiment that could yet take some time to fade.