Monday, April 11, 2011

Bill Gross - Bill Gross is now shorting U.S. Treasurys

Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., bet against U.S. government-related debt last month and boosted cash to be the largest of the Total Return Fund's holdings.

Pimco's $236 billion fund had minus 3 percent of its assets in government and related debt, after reducing the position to zero in February, the Newport Beach, California-based company said on its website. Cash and equivalents rose to 31 percent from 23 percent, making it the largest component for the first time in four years.

Gross has said he is concerned about what will happen when the Federal Reserve stops buying Treasurys, after the securities fell for a second quarter. The central bank implemented a plan in November to purchase $600 billion of debt by June 30 to sustain the economic expansion.

"Their objective obviously is to improve the economy and to create jobs, but also to put a floor under the stock market, and we know that's working," Gross said April 1 in a radio interview on "Bloomberg Surveillance" hosted by Tom Keene. "The question remains, when the Fed stops buying Treasurys, does the private sector take the baton and run the last leg of the relay race?"

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