Monday, April 12, 2010

Bill Gross is dumping Treasury Bonds

From The Business Insider, April 12, 2010:

Nine months ago, Bill Gross's Total Return Fund was 50% in US Treasuries. Now it's only 30%, the lowest percentage in the 23 year history of the fund, says Nelson Schwartz of the NYT.

Why is Gross dumping Treasuries?

Two primary concerns:

* Inflation
* The massive tidal wave of money the US needs to raise in the coming years, which will increase the supply of Treasuries (driving prices down and rates up).

More broadly, Gross believes that, while interest rates have now generally been declining for more than 25 years, we're now moving to an era in which rates will rise, not fall.

PIMCO has shifted money into corporate bonds and foreign bonds, including Germany.

FYI Bill Gross is possibly the foremost bond trader in the United States. He is one of very few people in the financial world who when he speaks people on Wall Street stop what they are dong and turn up the volume on CNBC.

1 comment:

The Anti-Gnostic said...

Since the housing bubble burst, the money has been flowing into sovereign and municipal debt, and that bubble will be liquidated in its turn.