Catherine, partner since 2022 (Toronto, Ontario)
This week in charts
National bond markets
Public and private bond markets
Bill Ackman makes $200mn from bet against US Treasuries
Billionaire hedge fund manager Bill Ackman made a profit of about $200mn from his high-profile bet against US 30-year Treasury bonds, according to people familiar with the trade.
The founder of Pershing Square Capital Management said on social media on Monday that he had exited the short position he first announced in August. His post helped fuel a recovery in Treasury prices, after an earlier sell-off had pushed yields to 16-year highs.
“There is too much risk in the world to remain short bonds at current long-term rates,” he said on X, formerly Twitter. “The economy is slowing faster than recent data suggests.”
Ackman made the bet against 30-year bonds using options, derivatives that allow traders to profit from a fall in prices without having to borrow and sell the underlying bonds, the people familiar with the trade said. While he made about $300mn from moves in the market, he also paid out nearly $100mn in premiums that allowed him to maintain his position.
The $200mn profit helped Pershing Square’s $13bn flagship fund gain 11.6 per cent in the year to October 17, according to figures published by the firm.
The gains from Ackman’s recent trade are dwarfed by the $2.3bn he netted from another bond market short last year. He entered that bet, which was mostly focused on two-year Treasuries, in December 2021. The trade was described in investor documentation as a hedge for his stock portfolio which fell sharply in value during last year’s bear market. The profits from that bond trade did not fully offset losses in equities, leading to the fund falling 8.8 per cent last year.
He also made $2.6bn during the early stages of the Covid-19 pandemic from bets that companies would struggle to pay their debts.
When Ackman announced his latest bet against US government debt, 30-year Treasuries were yielding about 4.3 per cent. After briefly touching a high of 5.18 per cent on Monday, yields have dropped back to about 5.09 per cent.
In August, Ackman had argued that longer-dated Treasury bonds were “overbought”. Stubbornly high inflation, he said, made it more likely that the US Federal Reserve would increase interest rates, hitting bond prices and driving yields higher.
He also said that “an increasing supply of [Treasuries] is assured” owing to a large US government deficit, which he expected to drive down prices.
Latest in mortgage news: Equitable Bank unveils 40-year amortization mortgage
Equitable Bank has announced that, in partnership with a third-party lender, it is introducing a new 40-year amortization mortgage product.
Equitable, Canada’s seventh-largest bank, which provides both prime and alternative lending options, made the exclusive announcement at the National Mortgage Conference in Toronto last week.
By extending the amortization period beyond the standard 25 or 30 years, the bank seeks to lower monthly payment obligations, making home ownership or investment in properties more accessible amidst the current economic and affordability challenges.
As part of the funding structure for this product, Equitable has partnered with a third-party lender, meaning Equitable will not take on any credit or default risk as the loans won’t appear on its balance sheet.
In essence, Equitable will act as the originator and service provider to its funding partner, providing the underwriting, closing and servicing over the life cycle of the loans.
This week’s fun finds
EdgePoint’s favourite little monsters
The Toronto office was in for a treat when several internal partners brought in their kids for some candy and a pizza party.
Kelly Moye, a Compass real estate agent in Boulder, Colo., keeps a list of go-to professionals who help make her listings as appealing as possible: furniture stagers, floor repair people, lighting designers — and two “home energy clearers.”
The “clearers,” she says, are “the exact same as a stager — the stager stages the furniture, the clearer stages the energy.” Moye calls on clearers when houses that otherwise seem prime for a sale just won’t move for mysterious reasons. Although she was at first skeptical, she says the clearers’ “actions have been so confirmed for me over the years, I kind of stopped thinking it was goofy.”
Moye rattles off a half-dozen anecdotes about times when a property kept getting the same feedback from other agents — “It just doesn’t feel right” — and calling in a clearer was what finally made the difference.
In one such instance, she was hired to sell a 19th-century Victorian in Denver. Her clients were giving her a tour of their home when they arrived at the entrance to the basement. As Moye began to descend into the old cellar, the owners’ cats, which had followed her throughout the house, suddenly put on the brakes and refused to go past the top of the stairs.
She asked the owners whether anyone had ever commented about it. Turns out, nobody wanted to go down there, humans or animals. “And I said, ‘Well, let me get my house clearer over here and see what’s up, because if you get this funky feeling that I got, that’s not going to work for a buyer,’” Moye recalls.
Both of the psychic-like professionals in Moye’s Rolodex offer roughly the same service. For $300, they’ll take between four and five hours to do an elaborate ritual, going into a trance-like state to “communicate” with the space. In this case, the clearer uncovered that past owners of the home had illegally made alcohol during Prohibition, and the basement had been the site of a deadly police raid. After clearing the energy of those murders, Moye says, the cats would enter the space without fear — the owners even put their litter boxes down there during showings.
