PIMCO’s Mohamed El-Erian says his firm sold out of its U.S. treasury position because it has no idea who will be buying the investment at current prices after the end of QE2.
“Who will buy at these prices? If you can’t identify a buyer, you don’t want to own the investment,” he said at today’s Reuters Newsmaker event.
This clarifies a bit Bill Gross’ earlier comments on the matter, where he said he didn’t know who would be buying the investment after QE2.
El-Erian said PIMCO felt, “there was better value elsewhere,” in other investments similar to treasuries.
He did caution that the problem with treasuries could escalate if the U.S. doesn’t get its fiscal situation in order in three to four years.