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Bill Gross, peaceful yoga master of Pimco’s far-flung bond empire, does not care for your Treasury debt, and he has been betting against it since March (he claims he is not actually “short” Treasurys as we mortals understand it; he’s just underweight his usual allocation of the stuff. But there are reasons to believe he’s muddying the waters on the issue, seeming to contradict his own firm’s disclosures). And he is on Twitter and CNBC pretty much every day telling you why you shouldn’t buy Treasurys.
Trouble is, nobody’s listening to him. His campaign against Treasurys has been an epically bad call, as people keep finding plenty of reasons to buy the stuff.
La raison du jour is the latest chapter in the European debt crisis, which has brought about a new low in Mr. Gross’s anti-Treasury crusade. A flight to quality has taken the 10-year Treasury yield down to about 3.1% from 3.7% in February, when Pimco’s Total Return Fund slashed its allocation to Treasurys to zero (it went negative in March).
No doubt, Mr. Gross is simply early, not wrong. Early is quite often, and unfairly, indistinguishable from wrong, so this blog will continue to check in on Mr. Gross’s bet and ask: Is he right yet?
The answer today is no. No he’s not.
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To ask whether Gross is right or wrong on his Treasury call is just part of the issue. How are the PIMCO bond funds doing? The funds are doing just fine. News flash, there are other types of bond holdings than U.S. Treasuries. Relative value anyone? PIMCO is making money underweighting Treasuries, because the other fixed income holdings are doing even better.
most of the time these big money investors will move the market in their favor when they pronounce something new which is not in the vogue at that time. He did that but it didn’t move. Now he is shouting it out aloud everyday. mkt hasn’t listened yet. One day, obviously it will because yields can’t go lower forever. That day he will again appear on TV and take victory lap. But if he looks around, there won’t be anyone with him so victory against whom???
I would say government should not let all these big investors become huge somehow. it is time to rein in them. for e.g. silver mkt is not too big so if few big hedge funds decide to bring it down or take it up, they will be successful in manipulation easily.
No, he’s wrong. He made that call four months and 65 basis points ago. Now he’s backtracking–shades of Meredith Whitney and her bad muni call. To say he will eventually be right is smarmy. Don’t want to make the big advertiser mad do we?
MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what's happening in the markets. The Wall Street Journal's Chief Markets Commentator Dave Kansas and MarketBeat lead writer Matt Phillips spearhead the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to marketbeat@wsj.com or write Dave at dave.kansas@wsj.com or Matt at matt.phillips@wsj.com.
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