Druckenmiller is long equities and commodities, short fixed income, long commodity currencies and short yen.
“Well, I'm long equities. I'm long some commodities. I'm short fixed income. And I'm long commodity currencies. Short the yen. So all sort of for now.”
Druckenmiller is long equities and commodities, short bonds and yen, and long commodity currencies betting on benign economic outlook.
“I'm long equities. I'm long some commodities. I'm short fixed income. And I'm long commodity currencies. Short the yen. So all sort of for now.”
Druckenmiller notes $18 trillion in negative-yielding debt existed a year ago despite imminent 8% inflation.
“Even as late as, I think a year ago, was 18,000,000,000,000 of debt that was still negative yielding when the world was about to experience 8% inflation. It's pretty extraordinary.”
Druckenmiller warns that defending a bond price level invites market tests of government resolve that require ever-growing interventions.
“Once markets believe Treasury is defending a price, every rise in yields becomes a test of official resolve, and the operations must grow to survive the tests.”
Druckenmiller says the only durable way to lower long-term yields is to address the primary deficit.
“Then do the only thing that durably lowers long-term yields: address the primary deficit.”
Druckenmiller states that a 30-year Treasury yield of 5.5 percent is not a crisis but simply a bill for fiscal choices.
“If the 30-year must trade at 5.5% to clear, that isn't a crisis. It is an invoice,”
Druckenmiller characterizes artificial yield suppression as a subsidy to government procrastination on fiscal reform.
“Every basis point of artificial yield suppression is a subsidy to procrastination,”
Druckenmiller argues Treasury intervention in bond markets risks escalating into ever-larger purchases if it tries to suppress long-term yields.
“ rather than a legitimate liquidity operation. He contended that markets were correct to interpret the intervention as an attempt to suppress yields and warned that any effort to hold down long-bond yields could pull the Treasury into an escalating cycle of ever-larger purchases. ”