That the fate of US Treasuries (government bonds) is headed towards disaster is no secret. The Chinese, amongst the biggest holders of these bonds, have been crying hoarse of its futility for long. The US' ballooning deficit problem is also not unknown.
But when the world's largest bond fund PIMCO sheds all its US Treasury holdings, you know that the problem is grave. Its chief fund manager Bill Gross has been critical of the US government's low interest rate policy. But of late he has dumped all US Treasuries from his portfolio citing very low yields to sustain demand for the paper. He believes that the yields of around 1.5% were at historical lows. Not just that, it is also way below thenominal GDP growth of the US economy projected at 5%.
More importantly, Gross has reiterated interest in emerging market debt. These already accounted for 10% of his portfolio in January 2011. But instead of betting on better sense prevailing within the US Fed, Gross seems more sanguine about the future of conservative central bankers. Is the RBI listening?
Source - Equitymaster Agora Research Private Limited
But when the world's largest bond fund PIMCO sheds all its US Treasury holdings, you know that the problem is grave. Its chief fund manager Bill Gross has been critical of the US government's low interest rate policy. But of late he has dumped all US Treasuries from his portfolio citing very low yields to sustain demand for the paper. He believes that the yields of around 1.5% were at historical lows. Not just that, it is also way below thenominal GDP growth of the US economy projected at 5%.
More importantly, Gross has reiterated interest in emerging market debt. These already accounted for 10% of his portfolio in January 2011. But instead of betting on better sense prevailing within the US Fed, Gross seems more sanguine about the future of conservative central bankers. Is the RBI listening?
Source - Equitymaster Agora Research Private Limited
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