{"id":5277,"date":"2023-11-01T02:53:08","date_gmt":"2023-11-01T02:53:08","guid":{"rendered":"https:\/\/connectwithfund.com\/markets\/stanley-druckenmiller-slams-janet-yellen-for-not-locking-in-long-term-rates-calls-it-biggest-blunder-in-treasury-history\/"},"modified":"2023-11-01T02:53:09","modified_gmt":"2023-11-01T02:53:09","slug":"stanley-druckenmiller-slams-janet-yellen-for-not-locking-in-long-term-rates-calls-it-biggest-blunder-in-treasury-history","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=5277","title":{"rendered":"Stanley Druckenmiller slams Janet Yellen for not locking in long-term rates, calls it \u2018biggest blunder in Treasury history\u2019"},"content":{"rendered":"
\n

Treasury Secretary Janet Yellen has some explaining to do, according to hedge-fund titan Stanley Druckenmiller.<\/p>\n

Yellen missed an important opportunity, Druckenmille says, by not issuing more long-dated Treasury bonds when interest rates were, in the shadow of COVID-19, near zero. <\/p>\n

\n

\u201cJanet Yellen, I guess because political myopia or whatever, was issuing 2-years at 15 basis points \u2026 when she could have issued 10-years at 70 basis points or 30-years at 180 basis points,\u201d the former hedge-fund manager said during a conversation with Paul Tudor Jones at the Robin Hood Investors Conference, a clip of which circulated Monday on X, the social-media platform formerly known as Twitter. <\/p>\n

\u201cI literally think if you go back to Alexander Hamilton, [Yellen\u2019s approach represented] the biggest blunder in the history of the Treasury,\u201d Druckenmiller said. <\/p>\n

This omission seems even more egregious, according to Druckenmiller, considering that Americans refinanced their home loans at rock-bottom mortgage rates en masse, and corporations with sturdy credit ratings refinanced their debt. <\/p>\n

\u201cI have no idea why she hasn\u2019t been called on this. She has no right to still be in that job.\u201d <\/p>\n

\u201cWhen rates were practically zero, every Tom, Dick and Harry in the U.S. refinanced their mortgage \u2026 every corporation was extending their debt,\u201d he said. <\/p>\n

He then rattled off some alarming numbers to illustrate the consequences of not reining in spending. <\/p>\n

\u201cHere\u2019s the consequences, folks. When the debt rolls over by 2033, interest expense is going to be 4.5% of GDP if rates are where they are now. By 2043 \u2014 it sounds like a long time but it is really not; it is 20 years \u2014 interest expense as a percentage of GDP will be 7%. That is 144% of all current discretionary spending,\u201d he said. <\/p>\n

According to 10-year projections released earlier this year by the Congressional Budget Office, the federal government\u2019s nonpartisan budget agency, annual federal outlays are expected to swell to nearly $10 trillion by 2033 compared with nearly $6.3 trillion spent in 2022. <\/p>\n

It is projected that in 2033 the deficit \u2014 that is, federal expenditures in excess of revenue \u2014 will be more than $2.8 trillion, twice the $1.38 trillion from 2022. <\/p>\n

\u201cInterest expense alone will be 144% of all discretionary spending, so the politicians who are telling you, and who think they are not going to cut entitlements, it is just an outright lie,\u201d Druckenmiller said. <\/p>\n

To be sure, Yellen wasn\u2019t the only Treasury secretary to preside over this latest round of near-zero interest rates. Steven Mnuchin served as Treasury secretary under Donald Trump and didn\u2019t, leaving office in January 2021, nearly a year after the global coronavirus outbreak was formally labeled a pandemic. <\/p>\n

The Fed cut its benchmark policy rate to nearly 0% in March 2020 as the emerging pandemic upended global markets and economies. They remained at that level until March 2022, when the central bank embarked on what would become the fastest-pace wave of rate hikes since the 1980s.<\/p>\n

From the archives (March 2020):<\/strong> Fed, saying aggressive action is needed, starts unlimited QE<\/p>\n

Recently, the Fed\u2019s rate hikes and investor demand for greater term premiums have helped push yields on long-dated Treasurys to their highest levels in 16 years. <\/p>\n

Druckenmiller rose to fame on Wall Street for his work managing George Soros\u2019s Quantum Fund. Druckenmiller went on to post a stellar record at his own hedge fund, Duquesne Capital Management, which he closed in 2010, converting it into a family office. <\/p>\n

When approached for comment, a representative for the Treasury Department told MarketWatch via email that the department has dramatically increased the average maturity of outstanding bonds over the past few years. <\/p>\n

\u201cAs part of our regular and predictable issuance framework,\u00a0Treasury\u00a0has substantially increased longer-dated debt issuance over the past several years, with the average maturity of the debt near all-time highs in 2023,\u201d the representative said. <\/p>\n

The department on Monday released its latest borrowing estimates for the fourth quarter, saying \u00a0it expects to borrow $776 billion, which represented a reduction of $76 billion from the prior estimate, made in July.<\/p>\n

See: <\/strong>Treasury cuts its fourth-quarter borrowing estimate<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Treasury Secretary Janet Yellen has some explaining to do, according to hedge-fund titan Stanley Druckenmiller. Yellen missed an important opportunity, Druckenmille says, by not issuing more long-dated Treasury bonds when interest rates were, in the shadow of COVID-19, near zero. \u201cJanet Yellen, I guess because political myopia or whatever, was issuing 2-years at 15 basis points \u2026 when she could have issued 10-years at 70 basis points or 30-years at 180 basis points,\u201d the former hedge-fund manager said during a conversation with Paul Tudor Jones at the Robin Hood Investors Conference, a clip of which circulated Monday on X, the<\/p>\n","protected":false},"author":1,"featured_media":5278,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-5277","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"\nStanley Druckenmiller slams Janet Yellen for not locking in long-term rates, calls it \u2018biggest blunder in Treasury history\u2019 | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Treasury Secretary Janet Yellen has some explaining to do, according to hedge-fund titan Stanley Druckenmiller. 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