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Bill Gross Sells $30 Billion In Treasurys In August As Total Return Fund Cuts Government Exposure By Over A Third

Tyler Durden's picture


While others were buying TSYs in the month of August on hopes of frontrunning the central printer, and expectations that Bernanke's NEW QE announcement will lead to even more flattening in the curve (even though as we explained there is only $650Bn in free 10-30 year private sector inventory available in the entire market), Bill Gross, via PIMCO's flagship Total Return Fund, was busy selling. So busy in fact that over $30 Billion in US paper was dumped to unwitting investors, resulting in the move wider by the 10 Year paper which at auction earlier today priced at a multi-month high yield. As a result at the end of August, PIMCO's total Treasury exposure was just 21% of total AUM, the lowest since August 2011. And what did Pimco do with the proceeds? Nothing - it merely satisfied its margin cash position, which plunged from -18% to -6%.

Why did PIMCO sell? Fears of inflation, as can be seen in the attached chart of holdings duration, which dropped across the board, sending the TRF effective duration to the lowest it has been since May 2011, ot 4.21 years.


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Wed, 09/12/2012 - 15:57 | 2787171 PrintingPress
PrintingPress's picture

Print me a river!

Wed, 09/12/2012 - 16:06 | 2787215 LMAOLORI
LMAOLORI's picture



Long Cash the interest rates will be rising in the 80's you could make 20% on a money market

Wed, 09/12/2012 - 16:08 | 2787227 Alea Iactaest
Alea Iactaest's picture

WTF on VIX120919P14 ???


Wed, 09/12/2012 - 16:14 | 2787245 Pladizow
Pladizow's picture

If Bill would only follow through with what he know's is best, complete the trasaction and buy physical gold!

Wed, 09/12/2012 - 18:35 | 2787687 WhiteNight123129
WhiteNight123129's picture

The Fed will not print more because inflation is finally arriving, which means game over for the bull market in Treasuries, except if we have a big knee-jerked scare on Spain, than short more Treasuries.  Staglflation is coming slowly, thank you Bernanke, you did good this time. We need inflation, Krugman is correct.


Wed, 09/12/2012 - 15:58 | 2787176 vmromk
vmromk's picture

I guess Gross isn't buying into the Bernanke Ponzi.

Wed, 09/12/2012 - 16:05 | 2787214 Peter Pan
Peter Pan's picture

It reminds of that saying that men go crazy in herds but come to their senses one by one.

Wed, 09/12/2012 - 18:38 | 2787692 WhiteNight123129
WhiteNight123129's picture

Gross recognizes that the Fed has managed to create inflation, so no more need for QE, the beautiful deleveraging of stagflation is starting.

Wed, 09/12/2012 - 19:22 | 2787771 chump666
chump666's picture

 inflation.  China/India bond markets have collapsed.

Wed, 09/12/2012 - 15:59 | 2787185 Boilermaker
Boilermaker's picture

Oh MY LORD!  Really!?

Wed, 09/12/2012 - 16:00 | 2787188 kaiserhoff
kaiserhoff's picture

money talks, bull shit walks.

Fuck you Ben

Wed, 09/12/2012 - 16:00 | 2787193 Hype Alert
Hype Alert's picture

But the Bernank can stop inflation in 15 minutes.

Wed, 09/12/2012 - 16:15 | 2787247 idea_hamster
idea_hamster's picture

I suppose -- in the same way that the mountain can stop the goddam plane.

Wed, 09/12/2012 - 18:20 | 2787655 knukles
knukles's picture

Chuck Niorris can do it in a millisecond!

Wed, 09/12/2012 - 16:01 | 2787196 Pancho Villa
Pancho Villa's picture

What happens to LT Treasury yields when the Fed runs out of ST stuff to twist?

Wed, 09/12/2012 - 16:19 | 2787267 Wolferl
Wolferl's picture

They print new ST stuff.

Wed, 09/12/2012 - 16:02 | 2787199 ParkAveFlasher
ParkAveFlasher's picture

I don't see "cash substitutes" on this graph ... am I looking in the right place?

Wed, 09/12/2012 - 16:23 | 2787287 sdmjake
sdmjake's picture

You mean Ben's Barbarous Relics or these "Cash Substitutes": ????

Wed, 09/12/2012 - 16:31 | 2787316 ParkAveFlasher
ParkAveFlasher's picture

Whatever you say bro.  +1 green arrow up up up

[edit: I meant 'money substitutes' in the first comment.  I hope that perfect ass of yours forgives me]

Wed, 09/12/2012 - 16:43 | 2787376 sdmjake
sdmjake's picture

oh yeah, its all good...i just wanted an excuse to post that clip.

{JimCarrey's expression is so serious/funny when the guy is about to open the suitcase. He is so proud of what he's done. I think Bernanke must look like that each time he hits [ctrl-p] & prints up another suitcase full of IOUs.}

Wed, 09/12/2012 - 17:02 | 2787201 Yen Cross
Yen Cross's picture

 Would someone put a muzzle on that "Tweetaholic" Gross, already.

Wed, 09/12/2012 - 16:03 | 2787205 Boilermaker
Boilermaker's picture

As the FED bangs the living shit out of the SPX at the close.

Seriously.  Give it up.  Stop trying to pretend this is, in any way, worth discussion.

Wed, 09/12/2012 - 16:12 | 2787238 Nothing To See Here
Nothing To See Here's picture

Time to short treasuries?

Wed, 09/12/2012 - 16:13 | 2787239 galtgulch9
galtgulch9's picture

I guess that he isn't free to use the cash to buy silver or gold.

Wed, 09/12/2012 - 16:13 | 2787242 mayhem
mayhem's picture

what happens if they don't print?

Wed, 09/12/2012 - 16:18 | 2787264 Rainman
Rainman's picture

dust off your Dow 10k hat

Wed, 09/12/2012 - 16:27 | 2787301 RSloane
RSloane's picture

I have a 10K beanie, will that do?

Wed, 09/12/2012 - 16:18 | 2787250 Cognitive Dissonance
Cognitive Dissonance's picture

"Why did PIMCO sell? Fears of inflation...."

Yes.........but did he buy Gold?

That's the only question that counts.

<When exclusively US Treasury mutual funds try to change their prospectus to allow them to buy Gold the top will be in.>

Wed, 09/12/2012 - 16:33 | 2787328 RSloane
RSloane's picture

Yes, he is and is urging other investors to do the same.

Wed, 09/12/2012 - 20:21 | 2787888 mr66
mr66's picture

yes   he is a gold buyer

Wed, 09/12/2012 - 20:44 | 2787928 GCT
GCT's picture

Maybe Bill got the word that gold will now be an offical teir one asset.  Now this could be fun! 

Wed, 09/12/2012 - 16:17 | 2787255 max2205
max2205's picture

I Ben wonder who Ben bought them Ben....Ben

Wed, 09/12/2012 - 16:17 | 2787258 Wolferl
Wolferl's picture

I wonder, did this guy ever make money over the past two years?

Wed, 09/12/2012 - 16:27 | 2787292 Cognitive Dissonance
Cognitive Dissonance's picture


His total return fund (when adjusted for the Dec 2010 dividend/cap gain distribution) has indeed made money.

2Y Pimco Total Return A share

Wed, 09/12/2012 - 16:29 | 2787306 LawsofPhysics
LawsofPhysics's picture



Here is the one I jumped in back in 2009 -PTRAX.


Wed, 09/12/2012 - 16:30 | 2787317 Yancey Ward
Yancey Ward's picture

Better to look here so you don't have to get fooled by capital gains distributions:

Wed, 09/12/2012 - 18:52 | 2787718 Yen Cross
Yen Cross's picture

 2% under the rate of inflation. (Jan 11- 10.65% to Sept-2012-11.5%) I'm being generous./ and sarcastic ;-)

Wed, 09/12/2012 - 16:20 | 2787271 eddiebe
eddiebe's picture

In a fight between Bill and Ben, I'll bet on Ben every time.

Wed, 09/12/2012 - 16:30 | 2787314 LawsofPhysics
LawsofPhysics's picture

Fight? If you mean like a Harlem Globtrotter "fight", then you are right.

Wed, 09/12/2012 - 16:39 | 2787351 drivenZ
drivenZ's picture

Bill would bet on Ben as well. He said word for word a few days ago on BBG radio "Don't fight the fed or the ECB"

Wed, 09/12/2012 - 16:51 | 2787410 Winston Churchill
Winston Churchill's picture

Long flower pots.

Wed, 09/12/2012 - 16:45 | 2787385 RSloane
RSloane's picture

He could have summed it up with "We canz print money, Spain and Italy can't, we win!"

I have to go back and finish watching it, that one point about money printing really got to me.

Wed, 09/12/2012 - 16:49 | 2787399 RSloane
RSloane's picture

I totally agree with this point re reference to debt/spending: "We've made a lot of promises we can't keep." Also his discussion on who exactly is buying our debt and what we can expect from them is spot on. All in all, good link. Thanks, Chaco.

Wed, 09/12/2012 - 17:01 | 2787439 sdmjake
sdmjake's picture

Thanks for the link. Dalio is worth listening to.

Wed, 09/12/2012 - 16:23 | 2787289 ptoemmes
ptoemmes's picture

I guess we'll see if BG is a Muppet Master or not...

Wed, 09/12/2012 - 16:31 | 2787321 RSloane
RSloane's picture

Bill Gross has indeed been buying gold, and urging others to buy real assets instead of paper foo-foo. There've been several articles about it including on Forexpros.

Wed, 09/12/2012 - 18:00 | 2787379 Albertarocks
Albertarocks's picture

I'm not necessarily a Bill Gross fan, but what is it that makes the buyers of his holdings "unwitting investors"?  Like, is there some sort of conspiracy going on that only Gross knows about or were those words chozen just to paint this piece with some sort of "spin" to suit an agenda?  I ask this with full respect of course, but in my humble opinion whoever bought that $30 billion worth of bonds from him in August had better know what the fuck is going on or somebody's likely to fire 'em.  If they're really all that "unwitting" perhaps they should be employed in a different profession like maybe working for the SEC or maybe a congressman or a game show contestant or something.  Just sayin'.

Wed, 09/12/2012 - 16:57 | 2787387 WhiteNight123129
WhiteNight123129's picture

Inflation is coming and so the relief for consumer, capital will start to be destroyed (bonds and stocks), and the move to stagflation is on. The consumer will use the higher amoutn of nominal dollars to repay his debt faster, and hte companies will be forced to pay higher wagers, the share of gain to consumer will increase, the share to capital decrease, and stock and bonds will suck in real terms, and commodities will rise nicely. The corporate margins have peaked and will suck from now on. This is a good outcome, this is a beautiful deleveraging and hte Fed is fucking the capital providers in the ass. Don t bash Bernanke, he is fucking up the stock and bond holders, helping the guy deep in debt and helping the redneck with his little savings in Silver to take a revenge on capital owners who thought they could endlessly push up consumption through consumer debt leverage and at the same time lower costs by offshoring to china which was repressing wages. That was unsustainable, you can not have the capital providers be endlessly fatter and fatter and the consumer skinnier and skinnier.The reason is that in the end someone has to buy the products, or if you will, Aaple could sell its iPhone 5 to Samsung and Samsung sell its Galaxy IIIS phone to apple, but that would be total PONZI. THat can not work, so up to now the corporation have accumulated fat and cash, the beginning of disaccumulation of fat of corporation is starting with Bernanke jacking-up prices and forcing wage inflation. Inflation hurts the guy with the savings, but hte consumer has none, he has debt, people deep into debt always benefit from inflation. Don t bash Bernanke , he is trying to create wage inflation, and trying to fuck the bond holder and equity holder while making them believe he is their friend.




Wed, 09/12/2012 - 17:07 | 2787462 LawsofPhysics
LawsofPhysics's picture

"Forced to pay higher wages" -  With unemployment still high and your congress total owned, corporations won't be "forced" to do shit.  NO SARC.

Wed, 09/12/2012 - 17:23 | 2787502 RSloane
RSloane's picture

That would work really really well if we had unicorns to ride to work and except for the following reasons:

- The US economy does not exist in a vacuum. The global flow of cash and assets will go to the line of least resistance, and this includes wages. The line of least resistance is not the US economy nor the US unit of labor. There is a lot of foreign capital flowing into the US, yes, but the primary investments are not in labor. Its just a unit of the total investment picture. If it gets too expensive or cannot deliver, the flow of foreign capital will go elsewhere.

- Bernanke is the friend of equity holders and bond holders. Bennie loves Wall Street and does not appear to be ruffled by the disconnect between Wall Street and Main Street. Do you really believe that of the trillions he has spent/created so far, any of it was designed to immediately provide relief to labor, unless of course you are talking about Wall Street bankers as 'labor'.

- Just because a specific corporation or bank has their HQ in the US does not mean their 'fat' is dedicated or in any way attached to the US. The A made an asston of money primarily because their 'fat' went to other labor markets to create their products, then sold it here and in other parts of the Western economy. When you look at the wealth and health of a particular corporation you have to, must, also view where they generate their most cash, where they save production costs. It isn't in the US.

Wed, 09/12/2012 - 17:52 | 2787593 aerojet
aerojet's picture

Wage inflation, I fucking wish!  I am paying nearly $4/gal for gasoline, a pound of apples (not iCrap, I mean actual apples), depending on the variety is between $2 and $4, and that means roughly 2 apples--who even prices apples per pound except bullshit fucking grocery chains who have completely deserted the consumer as far as offering value, but that's a side issue--the point is, the hidden inflation is seeping out of the cracks, and I'm sorry Frito Lay, but you can't take one more chip out of an empty bag, you fuckers!


Wed, 09/12/2012 - 19:36 | 2787803 Nehweh Gahnin
Nehweh Gahnin's picture

Try to find a good set of used tires.  They ain't there.  There are new, and flat-ass bald.  New tires are outrageous.  Take a look at your local classifieds and look for firearms.  Those aren't there either.  Lot's of massages, but no one is selling their hardware.  Come to think of it, I haven't seen any long-yield bonds, either.  Hmmm...

Wed, 09/12/2012 - 20:49 | 2787940 GCT
GCT's picture

Wow did MDB change his name?  This is a hilarious post.  We all already know the people doing the right thing are getting screwed.  I guess your parents will now live with you when the Fed steals all of their savings.

Wed, 09/12/2012 - 17:13 | 2787473 Tombstone
Tombstone's picture

Gross is grossly over used as an authority on bonds.  I think James Grant is vastly smarter and more viable as an information source.  Gross is only interested in saving his own butt.

Wed, 09/12/2012 - 17:30 | 2787525 RSloane
RSloane's picture

Gross may very well be interested in saving his own butt, but his total devotion is to making money. James Grant rocks. Even when I'm disagreeing with him I still have to smile while watching him. He's a rare bird, a national treasure. I never miss him when he's on CNBC. The look on the commentors' faces is priceless when he lets loose on them.

James Grant - The bond market is a desert of value:

Wed, 09/12/2012 - 17:18 | 2787479 ArrestBobRubin
ArrestBobRubin's picture

Well sure he did. Bill didn't want to have to spend to change the name on everything from business cards to coffee mugs to The Total Loss Fund.

Wed, 09/12/2012 - 17:16 | 2787481 Downtoolong
Downtoolong's picture

Bill Gross Sells ......Treasurys

Me too. And though Bill is not always right, anymore than the next monkey throwing darts a board, there is something satisfying about knowing you front ran him.

Wed, 09/12/2012 - 17:47 | 2787580 aerojet
aerojet's picture

I have some 401K money is Pimpco's Total Return Fund.  The thing is a total joke--it's all junk bonds.  But it doesn't matter because the whole world has been downgraded to junk bond status.  I don't know why people bother investing or even worrying about this shit anymore because one day the whole fucking mess is going to zero.

Wed, 09/12/2012 - 19:31 | 2787789 Nehweh Gahnin
Nehweh Gahnin's picture

Fool me once, shame on you.  Fool me twice...

Looks like the same shift that happened when he got caught by surprise in Oct. '08.  This time he's ahead of the curve.  Bright guy.

Wed, 09/12/2012 - 19:55 | 2787844 DavosSherman
DavosSherman's picture

PIMCO was pimping gold on Bloomberg TV, he had a Sterling Stamos Moment.

Wed, 09/12/2012 - 21:09 | 2787980 chump666
chump666's picture

Hmm, funds are selling USDs now, Gross sells USTs, holds cash.  As the QE3 is delayed till end year, Oct (after terrible company earnings profits slaughter stocks).

The momo idiots are hedging on the continued stock rally and USD selling, will be decimated.  The moves in stock selling (futures) is the above UST selling.


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