Pimco Dumps Treasuries In July, Boosts Holdings Of 3-10 Year Securities In Another Example Of Fed "Anticipation"

Pimco's Total Return Fund has released its July portfolio composition. The most notable difference is the cut in US Treasury holdings from 63% (or $147 billion) in June to "just" 54% in July: an almost $20 billion reduction in UST holdings. And even as he cut his government holdings, Gross kept flat or added to all other asset classes, with MBS increasing from 16% to 18% of AUM, and EM holdings increasing to a record 11% of holdings. This is undoubtedly a function of his recently publicized interest in Brazil. The question is whether Gross' EM interest will suffer the same fate as his investment in non-US developed bonds, which peaked at 19% in February and has sine plunged to a low of 3% in June, to close July at 5%.

More importantly, parsing through the fund's maturity profile, we notice that Pimco's holdings now have the longest duration they have had in at least two years, and possibly ever: just 20% of Gross exposure is in sub-3 Year maturity paper. Gross' current sweet spot is in the 3-10 year part of the curve, which of course makes all the sense for the man having made his career by frontrunning the Fed - let's recall where the Fed recently announced it would be focusing its Treasury purchases.... yep - precisely the part of the curve where Pimco now has almost 60% exposure. Good work, Bill.

Comments

[Ragnarok]

As long as the Feds sponge is big enough and the foreigners don't liquidate he'll make a buck.

[Number 156]

I take it that you use the word 'Anticipation' loosely.

[traderjoe]

Interesting climb on UST's throughout the afternoon. Something cooking for the weekend? Not to read too much into it, but no slow down of the ramp all day long, even after the eco data got digested. TLT back to 52-week highs (triple top). 

[iPood]

 Bill Gross on the rolldown: 

“As long as short rates stay at zero or close to zero, and that’s the key caveat, then an investor can make money simply by buying 5-year Treasuries, watching them roll down the curve to four years and then popping back up to five years again.”

http://bit.ly/cXBLbI

[Cognitive Dissonance]

Yup. Sounds like old Bill just described government subsidized investing that can't loose. Which from where I stand doesn't meet the criteria for investing, which implies some risk to principal.

Wait a minute. I take that back. If I'm going to put all my faith and belief in a sure thing return by investing in genuine US Government Treasuries, I suspect I'm taking on a bunch more risk than is being advertised. In fact, where is that prospectus Jim Grant produced some time back on US Gvt debt?

Here it is. Thanks Tyler.

http://www.zerohedge.com/article/jim-grant-presents-prospectus-united-states-discusses-death-penalty-us-coinage-debasers?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

[Spitzer]

dry throat Gross is ripe for an ass kicking, he has had it too good for too long. When the dollar/treasury bubble bursts, he will pay his dues.

[bonddude]

"I am a flower that blooms in winter"-Hugh Hendry

[Mr Lennon Hendrix]

Pmipco dumped Treasuries in July?  Me too!  In the toilet. 

Co corporate and always bring a towel? 

Go gold and be your own banker.

[Rainman]

Gross moved the EM from 10 to 11%.......hardly a big push in. The real effect will be the influence on those who follow this gorilla around lockstep.

[youngandhealthy]

Bill rules...and you know it. Whats wrong making money?

[Captain Queeg]

Net of their fees, hard for their investors to have a positive return if they're at the front end of the current curve, especially in Treasuries.  

[Reese Bobby]

I don’t admire very many people on the buy-side, BUT:  “...the man having made his career by frontrunning the Fed”?  Bull-shit.  Bill Gross is hugely successful but still tortured and socially uneasy: In other words, a classic genius.  He has always thought outside the box and has as big a pair as anybody in the business.  And lately he has been poking the Fed for fun: e.g. suggesting they should sell their MBS…I wish I was that funny.

Unfortunately PIMCO is carefully maneuvering to reduce his influence and prepare for his retirement.  And there is only one Bill Gross.  Most other key people at PIMCO are pedestrians. PIMCO without Bill Gross will be just another WAMCO.

[I am a Man I am...]

Seems like the guys is selling into strength to me.   I been selling munis.

[QQQBall]

Since PimpCo holds such a high percentage in Usuries, good time to sell when you want to rather then when you are forced to.

[Madhouse]

When Pimco comes on the air talking about bond funds and dissing stocks, they is selling govvies.... all the time... you old card counter you..

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