Retirees, watch out: Long-term interest rates could rocket much further, warns this legendary fund manager

The bond market is in turmoil, bond funds are plunging, and long-term interest rates just hit their highest levels since the Bush administration.

In his latest letter to investors in his Pershing Square fund, Ackman warns that long-term interest rates could easily rise another 27% from here. That would entail a fall of about 10% from here in 10 year Treasury bond prices, and would almost certainly plunge the stock market into turmoil and threaten real estate as well.

Whether he’s right is another matter. Ackman’s argument is based on two separate things. The first is that the Fed will have to accept a higher rate of systemic inflation than it wants. The second is that in future buyers of Treasury bonds will demand a higher “real” rate of interest, meaning a rate of interest above inflation.

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Retirees, watch out: Long-term interest rates could rocket, warns this legendary fund manager'We believe that long-term interest rates can continue to rise substantially from current levels,' says hedge-fund manager Bill Ackman.
Source: MarketWatch - 🏆 3. / 97 Read more »

Terry Savage: High rates for how long?When interest rates were quite low just a few years ago, savers were actually punished for having chicken money. Inflation was higher than safe money savings rates. But as of this writing, you can get 5.5% on a six-month Treasury bill.
Source: chicagotribune - 🏆 8. / 91 Read more »