Billionaire Bill Ackman: "The US economy is starting to weaken"

Billionaire Bill Ackman, who heads the Pershing Square Capital Management fund, sounded the alarm on the economy, which he believes has begun to slow down due to aggressive interest rate hikes, according to CNBC.

"The Federal Reserve is probably done (n.r. raising rates). I think the economy is starting to slow down," Ackman was quoted as saying by the American publication. "The level of real interest rates is high enough to slow things down."

The investor's claims come as the Fed raised interest rates to their highest level since 2001 to tame inflation that at one point had reached a four-decade high. The US central bank has also signaled that it will raise interest rates once more this year, and that it will keep the cost of borrowing high for longer. In this context, many Wall Street analysts have begun to fear a recession, as there is a gap between the measures taken by the Fed since last March and the effects in the economy.

"High mortgage rates ... high credit card rates are all starting to really impact the economy," Ackman said. "The economy is still solid, but it is definitely weakening. I see a lot of evidence of a weakening economy."

According to the fund manager, in the current environment, long-term yields on government bonds can rise further. Ackman sees 30-year yields testing 5.5% and 10-year yields approaching 5%. Yesterday, at 17:30 Romanian time, the yield on US ten-year government bonds was 4.66%, after last week they had reached a record of the last 15 years, while the 30-year bonds had a yield of about 4 .77%, according to Investing.com.

"30-year bonds are likely to go higher," Ackman said, according to CNBC. "I don't know if the ten-year rate has to go significantly above 5% because we are noticing a weakness in the economy. But in the long run, in a world like this, we think structural inflation will rise steadily".

According to the billionaire, those who borrowed short-term at low interest rates that are now being re-evaluated, especially investors in the commercial real estate market, will have a "very challenging period". "I think that's really the big threat," Bill Ackman said, according to CNBC.