Billionaire investor Bill Ackman is issuing a warning, saying that there’s an imbalance between buyers and sellers of US government bonds.
In a new CNBC Television interview, Ackman says there are plenty of reasons why the Federal Reserve could make abrupt changes to its benchmark interest rates.
According to the billionaire, the US bond market looks shaky as the top foreign holders of government debt are unloading their Treasury troves.
“I think there’s, even in the relative short term, there are a number of reasons why rates can move a lot.
Among them, we have a government shutdown. We’re going into a highly probable government shutdown. We’re going to have a data shutdown. All these little government agencies that put out data that the Federal Reserve relies on to decide whether to adjust interest rates, they’re going to lose access to that data so kind of a dark period.
We have probably the worst technical environment in our lifetime for the supply of bonds versus buyer bonds. We have China selling. We have Russia, to the extent they own US securities and more, selling. We have Saudi Arabia selling.
We have an economy that is still strong and inflation at 3.5% to 4% and persistent.”
The latest numbers from the U.S. Treasury Department reveal that China’s holdings of Treasury securities plunged from $835.4 billion at the start of July to $821.8 billion at the end of the month – a decline of $13.6 billion.
The figures also show that Saudi Arabia, the United Arab Emirates and India are among those paring their Treasury holdings.
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