Who Will Buy Treasuries When The Fed Doesn’t?

One month before Standard & Poor warned of downgrade US treasury debt’s AAA rating, Bill Gross, managing director and co-CIO of PIMCO, asks: “Who Will Buy Treasuries When The Fed Doesn’t?”

His Answer: “I Don’t Know”; And Now Gross is Out Of Risk

In March PIMCO was dumping everything related to US rates, Pimco’s flagship Total Return Fund (TRF) has now taken an active short position in US government debt: -3% on a Market Value basis (or $7.1 billion), and a whopping -18% on a Duration Weighted Exposure basis. See the allocation information from fund factsheet below:

pimco-total-return-bond-allocation-mar-2011 — Pimco Total Return Bond Fund Allocation as Mar 2011

The world’s largest “bond” fund now has cash, at a stunning $73 billion, or 31% of all assets, as its largest asset class on both a relative and absolute basis. Cash is more than PIMCO’s holdings of Treasurys and Mortgage securities ($66 billion) combined.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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