Pimco signaling "no confidence" in US and British govt. bonds.

[dixiegrrrrl]

Pimco is selling its US Treasuries and British debt....
The take away here, as some know, is that Pimco is usually well ahead of the curve in financial developments.

Read details and economic concerns here:

http://www.telegraph.co.uk/finance/economics/6933232/Pimco-move-to-sell-gilts-raises-spectre-of-a-UK-sovereign-debt-crisis.html

[Dr.Phool]

1. You can take that to the bank.

They always seem to have the inside dope. And trading on information not in the public realm is perfectly legal in the debt markets.

If PIMCO is getting out of the markets....RUN!

[HBravo]

3. Agreed

but you can only run so far:-)

[BootinUp]

4. The question in my mind is

how does their predictions/actions cause the market to react a certain way like a stampeding herd?

[SpiralHawk]

2. Oh oh. Republiconomic karma coming home to roost

The Global pooch has been wide-stance republikonThink skrewed blu.

[roamer65]

5. Bill Gross continues to manage my money well, I see.

:evilgrin:

Best move I have ever made was to buy into his Total Return fund.

[A HERETIC I AM]

6. Your subject line is misleading.

The statement "Pimco signaling "no confidence" in US and British govt. bonds." is an inference on your part that is in no way suggested in the article. The sentence you pulled the quote "no confidence" from DOES NOT MENTION or indicate PIMCO feels the same way about US Government bonds.
Here is the only paragraph where the wording "no confidence" appears;

The move is doubly embarrassing for the Government because the head of Pimco's European investment team is Andrew Balls, brother of Schools Secretary Ed Balls, who is mastering the Government's re-election strategy. The move will be seen as a financial vote of no-confidence in the Government's handling of the economy. (They're talking about ENGLAND here, NOT the US. In fact, the ENTIRE ARTICLE is about England and only in the one single sentence below is US debt mentioned)

Which is immediately followed by;
Paul McCulley, a managing director at Pimco, said: "We are currently cutting back in the US and UK because... supply and demand dynamics are likely to be negatively affected as borrowing rises and central bank buying declines."

Sure, PIMCO is selling Treasuries, but that is completely expected and understandable in an environment where yields are likely to rise. They're a bond house, after all. If they didn't now sell the bonds they own that would be most affected by a steepening yield curve, their portfolio as a whole and all their funds that carry those bonds will suffer a lowering of their NAV as newer issue Treasuries carry higher coupons. And nothing pisses off investors more than watching the share price of their bond fund plummet. But I'm sure, dixiegrrrrl, you understand how all that works and why, right?

So what will happen as yields on US and UK bonds rise? It will get to the point where money will start flowing back in from the private sector because a 5 or 7 or even 8% coupon is going to be pretty hard to pass up. And when they get high enough, Mr. Balls, Mr. McCulley and the rest at PIMCO will be buying them faster than you can say "hyperbole is my middle name".

[westerebus]

7. Pimco. It is a small world after all. n/t