Mentor to Bessent, Close Ally of Warsh Speaks Out: U.S. Treasury Yields Are 'Even a Bit Low,' Rate Cuts No Longer Necessary

BlockBeats news, September 11: Wall Street legendary investor Stanley Druckenmiller said at a closed-door meeting in New York that current U.S. borrowing costs are "even a little low," and called Federal Reserve officials who still believe monetary policy is restrictive "simply ridiculous," saying rate cuts are no longer necessary. Druckenmiller is a longtime mentor to U.S. Treasury Secretary Bessent and Fed Chairman Warsh, and is also a close friend of Warsh.

Druckenmiller believes that given the state of the U.S. economy, the capital expenditure boom, and the market's competition for capital, U.S. Treasury yields are not particularly high, and the recent rise in yields is a slow process driven by fundamentals that has not made him worried. His remarks came as the 30-year U.S. Treasury yield briefly rose to 5.35%, the highest since 2007, while the 10-year U.S. Treasury yield approached 5%.

Speaking about artificial intelligence, Druckenmiller said that most of Duquesne Capital's recent profits came from AI investments, but related positions have now been reduced to 20% of what they were six months ago. He believes the AI buildout phase may be nearing its later stage, the market needs to start becoming vigilant, and warned that corporate earnings may be in a bubble driven by the AI investment boom.

On foreign exchange, Druckenmiller said he is unwilling to short the dollar because the United States has a clear global advantage in AI; he has been shorting the euro and the pound since the beginning of the year, but the related positions are far smaller than his previous currency bets.