Billionaire investor Bill Ackman said he believed 30-year interest rates would rise further, while his Pershing Square Capital Management hedge fund remains short on bonds, as he sees inflation remaining stubbornly high.
His comments came after the U.S. Federal Reserve held interest rates steady but stiffened a hawkish monetary policy stance that its officials increasingly believe can succeed in lowering inflation without wrecking the economy or leading to large job losses.
"The long-term inflation rate is not going back to 2% no matter how many times Chairman Powell reiterates it as his target," Ackman said in a post on social media platform X, formerly known as Twitter.
With autoworkers on strike, Ackman pointed to inflationary pressure from potential increases in workers' wages.
"The long-term deflationary effects of outsourcing production to China are no more. Workers and unions’ bargaining power continues to rise," he said in the post on Thursday.
He also highlighted the impact of rising energy prices.
The Fed's benchmark overnight interest rate may still be lifted one more time this year to a peak 5.50%-5.75% range, according to updated quarterly projections released by the U.S. central bank, and rates kept significantly tighter through 2024 than previously expected.
"The long-term inflation rate plus the real rate of interest plus term premium suggests that 5.5% is an appropriate yield for 30-year Treasurys," he said, adding he was surprised at how low long-term rates are.
The yield on U.S. 30-year treasuries rose on Thursday to 4.55%, their highest since January 2011.
(Reporting by Jyoti Narayan in Bengaluru; Editing by Sonali Paul)
