Bill Ackman Covers Bond Short: “Too Much Risk” to Not

Investing has always come with a certain amount of risk. And certainly, some times are more risky than others. Right now, though, is a particularly risky time, according to legendary investor Bill Ackman. And that’s why he’s taken the big step to cover a bet against the long-term Treasury. The reason, meanwhile, might leave you particularly unnerved, but the Vanguard Total Bond Market ETF (NYSEARCA:BND) is cheering right now, up fractionally in Monday afternoon’s trading.

Vanguard wasn’t alone, either; the iShares 20+ year Treasury Bond ETF (NYSEARCE:TLT) also gained on the news, and even more so than Vanguard did. But at the end of the day, it all came down to the same reason: Ackman’s short covering.

The Pershing Square CEO came out believing that, as the world looks increasingly fractious and the market increasingly unruly, more investors may look to bonds as a hedge against a sudden market drop. Essentially, as Ackman put it in a post on X, “There is too much risk in the world to remain short bonds at current long-term rates.”

That’s something of a pivot from his stance in August, when Pershing Square took a position against the 30-year Treasury, noting that it would serve as a “good standalone bet,” a protective measure against higher long-term rates and their potential impact on stocks.

Given the state of things right now, it’s not surprising that Ackman would believe there’s too much risk to not consider bonds. But given the state of governments these days, it’s easy to wonder just how much of a safe hedge those really are.

Are BND Shares a Good Buy Right Now?

Turning to Wall Street, a look at the last five days of trading for BND shows that trading has been volatile but within a very tight range. While BND prices have wavered up and down for those five days, generally, it’s traded between $68 and $68.50 for that entire time.

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