Stanley Druckenmiller warns the US economy is headed for a hard landing and a recession in 2023 on the Fed's aggressive tightening measures

• Billionaire investor Stanley Druckenmiller said he expects the US economy to fall into a recession next year on the Federal Reserve's aggressive rate hikes.
• "I will be stunned if we don't have recession in '23," he said Wednesday at CNBC's Delivering Alpha Investor Summit in New York.

Billionaire investor Stanley Druckenmiller anticipates the world's largest economy will contract next year on the back of the Federal Reserve's efforts to clamp down on high inflation.

"Our central case is a hard landing by the end of '23," he said Wednesday at CNBC's Delivering Alpha Investor Summit.

"I will be stunned if we don't have recession in '23. I don't know the timing but certainly by the end of '23. I will not be surprised if it's not larger than the so-called average garden variety."

The warning from Druckenmiller, who runs the Duquesne Family Office, comes after the Federal Reserve last week raised the fed funds rate by another 75 basis points. Policymakers are trying to cool inflation levels through higher borrowing costs that should slow economic activity. Inflation has been hanging around four-decade highs above 8% in recent months.

The Fed has been reducing the size of its nearly $9 trillion balance sheet and has jacked up the fed funds rate five times this year from near zero. The fast pace of rate hikes have included three sized at three-quarters of a percentage point, pushing the benchmark rate to a range of 3% to 3.25%. The Fed recently projected a peak rate of 4.6%.

"You don't even need to talk about black swans to be worried here," he said. The "risk reward of owning assets doesn't make a lot of sense," added Druckenmiller, who is credited with executing George Soros' famous $10 billion bet against the British pound in 1992.

Bond market investors have been signaling their views of an oncoming recession, sending short-term Treasury yields higher than long-term yields. The 2-year yield was at 4.27% on Wednesday and the 10-year yield was at 3.94%, with each recently hitting multiyear highs as bond prices drop.