Bill Gross’s Pimco Total Return Fund is now the most heavily invested in U.S. government-related debt that it’s been since 2004.
63% of the mammoth fund’s $192.6 billion in assets are now parked in debt backed by the full faith and credit of the U.S. taxpayer.
It’s a clear sign that Mr. Gross doesn’t see interest rates or inflation rising any time soon. It also shows that he isn’t worried about foreigners ditching U.S. bonds due to American budget concerns either. (Since such an event would trigger rising interest rates, hurting government bond prices)
Unfortunately his benign inflation and interest rate outlook also means that he doesn’t see the U.S. economy accelerating beyond the modest rebound it has staged already. Note he’s also cut his mortgage exposure to the lowest level since 2004 as well.
Bloomberg: “With unemployment in the double digits and likely to stay close to that for the next six months despite job creation ahead, the Fed has no where to go, [ie., Can’t raise interest rates]” Gross, co-founder and co- chief investment officer of Pimco, said in a Bloomberg Television interview on Nov. 19 from Newport Beach, California.
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