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Does Bill Gross wish he owned more Treasuries right now?
So bad he’s crying in his beer at night.
As Treasuries rallied in August, Bill Gross looked back on his big call in April – going short Treasuries – with regret.
Gross told the Financial Times:
“Do I wish I had more Treasuries? Yeah, that’s pretty obvious.”
“I get that it was my/our mistake in thinking that the US economy can chug along at 2% real growth rates. It doesn’t look like it can.”
Remember Gross’ PIMCO announced it went short Treasuries earlier this year. The bond fund had 3% of its portfolio short Treasuries based on the view (which hasn’t changed) that “on a long-term basis, governments are likely to use financial repression, where the rate of inflation is higher than bond yields,” according to the FT.
Then Treasuries rallied in August.
“When you’re underperforming the index, you go home at night and cry in your beer.”
“It’s not fun, but who said this business should be fun. We’re too well paid to hang our heads and say boo hoo.”
Now Gross says he’s changing his outlook somewhat. He told the Financial Times:
“We’ve moderated based on the outlook for the US economy, based on what Bernanke has done at the Fed in the last month. Freezing rates for two years, that was a pretty significant statement in terms of the vulnerability of Treasuries to go down in price and up in yield.”
He revised his “new normal” outlook downwards to “new normal minus.”