Photo: via PIMCO
Bill Gross is back, this time popping at Bloomberg to reiterate his bearish call on Treasuries (which he’s short).This time he’s not talking default or anything quite so dramatic — he just doesn’t like how much he’s getting paid to hold onto them: “I could join the dealers and say the 10-year’s not going to go to 4 per cent, so what am I left with?… I’m left with an under-yielding, less-than-inflation security. I have better choices. As a firm we’re not going to put up with it.”
Meanwhile, as the article notes, Treasuries as a class are having their best month since August, which is certainly not good for his big short bet on them.
It should (or at least it could) be an exciting week for this market, as Wednesday the Fed holds a meeting that potentially will clarify its post QE2 plans.
The idea that withdrawing from QE2 is necessarily rate positive might finally get tested.