Bill Ackman, Hedge Fund Billionaire, Believes Demand for US Debt Confronts Most Challenging 'Technical Environment' in Generations

Billionaire investor Bill Ackman sounds a cautionary note, citing an imbalance in the market for US government bonds between buyers and sellers

In a recent CNBC Television interview, Bill Ackman expressed concerns about potential abrupt changes to the Federal Reserve's benchmark interest rates. According to the billionaire investor, the US bond market appears unstable due to significant sell-offs by major foreign holders of government debt.

Ackman stated, "There are several factors that could lead to significant rate fluctuations in the near term. We are facing the possibility of a government shutdown, which would also result in a data shutdown. Many government agencies responsible for providing data that the Federal Reserve relies on to make interest rate decisions may lose access to that data during this period."

He continued, "Additionally, we are currently witnessing one of the most challenging technical environments in our lifetime in terms of the supply of bonds versus buyer demand. Notably, China, Russia, and Saudi Arabia have been actively selling their holdings."

Furthermore, Ackman pointed out, "Our economy remains robust, with inflation hovering around 3.5% to 4%, which adds to the complexities of the situation."

Recent data from the U.S. Treasury Department underscores these concerns, revealing a significant decrease in China's Treasury securities holdings, dropping from $835.4 billion at the beginning of July to $821.8 billion by month-end, representing a $13.6 billion decline. Additionally, Saudi Arabia, the United Arab Emirates, and India have also been reducing their Treasury holdings.

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Oct 08, 2023