Druckenmiller Says U.S. Treasury Yields Are Too Low, Rate Cuts No Longer Necessary

On September 11, investor Stanley Druckenmiller stated at a closed-door meeting in New York that the cost of borrowing in the U.S. is "even a bit low," and that rate cuts are no longer necessary. He believes it is "ridiculous" for Federal Reserve officials to think that monetary policy is restrictive. Druckenmiller pointed out that considering the state of the U.S. economy, the surge in capital expenditures, and the competition for capital in the market, U.S. Treasury yields are not high. The recent rise in yields is a slow process driven by fundamentals, which does not concern him. The yield on the 30-year U.S. Treasury bond briefly rose to 5.35%, a new high since 2007, while the yield on the 10-year bond approached 5%. Regarding artificial intelligence, Druckenmiller mentioned that most of Duquesne Capital's recent profits have come from AI investments, but the related positions have been reduced to 20% of what they were six months ago. He believes that the construction phase of AI may be nearing its later stages, and the market needs to remain vigilant, as corporate profits may be in a bubble driven by the AI investment frenzy. In terms of foreign exchange, he expressed reluctance to short the dollar, citing the U.S.'s clear global advantage in AI. Since the beginning of the year, he has been shorting the euro and the pound, but the related positions are much smaller than previous currency bets.