On CNBC today, PIMCO’s Bill Gross doubled-down on a tweet from earlier about how Paul Ryan’s selection could explain the recent Treasury selloff.He explained to CNBC:
I’m not knocking Paul Ryan because I’m a registered Republican, and he owns the Total Return Fund, so how could I knock him?
In any case, to the extent that [Ryan] has criticised Ben Bernanke in terms of the dual mandate – i.e., focusing on employment in addition to inflation – going forward, given a 50-50 chance of him being the vice president, perhaps the selection of a future Fed chairman in January of 2014 might be related to another “hard money” type of outlook.
Ultimately, that’s good for bondholders, but in the short run, it means higher interest rates. So, perhaps there’s a little bit of a twist there in the last few days.
On the other hand, as we pointed out yesterday, the big upward move in yields really started near the end of July, so we may just be seeing a continuation of the trend since then after a brief pause.