Pimco Goes to Cash, Exits Treasurys

Gross writes, who will buy Treasuries when the Fed doesn’t?" There will be immediate economic and social consequences for not kicking the economic can down the road if QE ends in June 2011. Pimco is right to be nervous regardless of any official decision. The secular trends illustrate why.

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI)


Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio


Headline: Pimco Goes to Cash, Exits Treasurys

Pimco has dumped all of its US Treasury bond exposure in its flagship Total Return Fund.

The move makes sense given Pimco chief Bill Gross's public statements that Treasurys are over-valued.

"It just gives people that follow him the bias not to bullish on the Treasury market," said Jefferies Treasury Strategist John Spinello. "He thinks rates are going higher."

In fact, there was little reaction in the bond market when news of move leaked out Wednesday morning.

Source: cnbc.com