Bill Gross runs the world's largest bond fund. He controls 236 billion dollars in assets. Needless to say, any moves that Mr. Gross makes are closely watched by the entire market. Recently Gross sold off his entire portfolio of US treasury bonds and raised his cash holdings to 31%. He has also shorted US debt by a small amount. Shorting basically means that he expects US Treasuries to go down in price. What this also means is that if he is correct the bond yields will go up. Bond yields are the percentage that the government borrows it's money. It's like their credit card rate. Since the government never pays more than the minimum, this is a big deal. Gross is seldom wrong. So what happens when a government already struggling with a mountain of exponentially increasing debt has it's borrowing rate increased? I think we're all about to find out.
http://www.bloomberg.com/news/2011-04-10/pimco-total-return-cuts-government-related-to-negative-boosts-cash-assets.html
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