Bill Ackman says Fed needs to lift key rate to 4-5pc by 2023
Timothy Moore
In a series of tweets, billionaire Bill Ackman said investors are mistaken if they think the outlook is improving because US bond yields have dropped.
“In order to stop the inflationary spiral, the Fed will need to rapidly raise rates to 4-5 per cent by next year, which hopefully will be enough to snuff inflation.”
Ackman argued that the reason for the drop in yields is a misinterpretation of what is a recession.
“The answer I believe is largely due to some misunderstanding about what a recession is, but more importantly technical factors that are driving volatility and the downward move in rates. Market participants speculating in the fixed income market,
particularly hedge funds, often use enormous amounts of leverage because it is available and it allows one to make windfall profits if you get the trade right.”
