Bitcoin.com - Stanley Druckenmiller of Duquesne Family Office has revealed his latest move in the US bond market. The billionaire investor, who has previously made millions for Duquesne Capital, does not believe that inflation will continue to decline and is therefore betting that bonds will eventually collapse.
Stanley Druckenmiller Bets Against the Trend in Current Fed Forecasts
Stanley Druckenmiller, the billionaire investor who made millions for his clients at the now-defunct Duquesne Capital, has announced his next big move in finance. Druckenmiller is reportedly short betting on the Federal Reserve's expectations that inflation will continue to decline and that recent interest rate cuts will continue.
In a recent conference appearance, Druckenmiller reportedly said he was reducing his positions in U.S. Treasury bonds. This behavior is effectively a bet on the Federal Reserve's inability to continue cutting rates, since bond prices are inversely related to yields, which are partly dependent on the cuts.
Druckenmiller's bet is also tied to inflation. He reportedly said inflation could reach 1970s levels, making it difficult for the Federal Reserve to maintain its loose policy and unable to stimulate the economy with additional cuts.
Druckenmiller plans to put 15% to 20% of his portfolio into it, making a big bet on the potential for the U.S. economy to worsen beyond what the Federal Reserve and economic analysts expect.
The investor’s actions are in line with his recent statements about the Federal Reserve’s policies and how he was unsure about their effectiveness. In an interview, he said that while the Fed believed monetary policy was restrictive due to the current real inflation rate, the market was giving the opposite signal. “Stocks are at record levels, gold is at record levels, GDP is above trend, credit is tight, bank earnings and forecasts look good, crypto is going crazy. We don’t see any restrictions,” Druckenmiller emphasized.
The bet could also be based on the growth of US debt and the loss of confidence in the government to honor it, which is causing investors to demand more interest to hold these instruments.