Big changes are afoot at Pimco Total Return Fund. As the latest report (August 31, 2011 see link below) indicates, Pimco is changing course to go long and to go home to government securities. Both are big changes from earlier this year.
This report from one of my favorite blogs, Zero Hedge, fleshes out the details [emphasis added]:
…As the just released latest monthly Total Return Fund data indicates, PIMCO now has a substantial net long position in Government Related securities, at $51.5 billion (net of swaps), a more than 100% increase from the $22.1 billion in July (and a far cry from the $9.6 billion short in April).
That’s a big boost in government securities. The question is why are they doing this? The ZH folks believe this is a ‘tell’ or an indication that Gross believes the Fed is going to intervene in the bond market in a big way by buying long maturity bonds. That makes sense, but there may also be a simpler explanation, which I’ll get to in a moment. ZH continues with thoughts on what the latest Fed intervention — Operation Twist or Torque or whatever it will be called — will do:
Read Full Article »