Wall Street Today | Bill Ackman Cashes Out Bet Against Treasury Bonds as Yields Hit 16-year Highs

One of Wall Street's most prominent bond bears has decided to walk away with his gains, declaring that Treasury yields are likely poised for a turnaround following an ascent that rattled global markets.

Pershing Square's Bill Ackman said Monday that he has closed his bet against 30-year Treasury bonds, saying in a series of posts on X, the social-media platform formerly known as Twitter, that "there's too much risk in the world to remain short bonds at current long-term rates."

"We covered our bond short," Ackman declared in a post early Monday. Stocks were “helped by a retreat in yields from their intraday highs after a tweet from Pershing Square’s Bill Ackman that he had covered his bond shorts and that the U.S. economy was weaker than it looked,” said Michael Hewson, chief market analyst at CMC Markets, in a note.

"With the peak level for the 10-year yield still anyone's guess, the US equity market should remain under pressure since breadth and relative strength readings have yet to hit extremes," said Sam Stovall, chief investment strategist at CFRA told Bloomberg. "As a result, one thing is certain: October will add to its reputation as the most volatile month of the year."

While the rise in rates usually makes stocks look less attractive versus Treasuries, the spread between the earnings yield on the S&P 500 and the 10-year rate — the equity risk premium — does not look alarming, according to David Lefkowitz, head of US equities at UBS Global Wealth Management.

While history suggests that a 10-year Treasury rate greater than about 6.5% tends to lead to lower valuations, it’s hard to know if this "tipping point" is still valid, Lefkowitz said.

West Texas Intermediate fell below $86 a barrel in a volatile session that saw prices swing in a more than $2 range. Israel appeared to hold off on its widely expected ground offensive into the Gaza Strip to buy time for the release of hostages held by Hamas. Additionally, 27 European Union leaders aim to endorse a "humanitarian pause" to distribute aid in Gaza.

"While invasion tensions have eased somewhat, crude traders remain very nervous," said Dennis Kissler, senior vice president for trading at BOK Financial Securities. Production in the Middle East has remained intact, keeping markets in "a very nervous balancing act."

Oil has advanced since the Oct. 7 attack on Israel by Hamas amid concerns the conflict will drag in other countries, though the lack of any immediate disruptions has limited the gain to less than 5%.

Bitcoin-related assets also rose to start the week. Shares of Coinbase Global, which is slated to report third-quarter earnings next Thursday, gained nearly 3%. Shares of Bitcoin miners Marathon Digital and Riot Platforms jumped.