Tuesday, October 11, 2011

If Bill Gross is a Buyer, I'm a Seller ($TLT)

Zero Hedge just published a post with an update on Bill Gross/PIMCO's current fixed income holdings. He has eliminated all the Treasury bills and greatly increased the size of his longer-term (>5y) Treasury bonds.

In the spring (when Gross was bearish on bonds and I was bullish), their portfolio duration was a little over three years. Now that there has been a huge run up in bonds, they have more than doubled that duration.

If you are a deflationist, forget owning bonds, you should be short base metals/copper. The deflationary shock that current bond yields imply has not been fully priced into a number of areas, including base metal prices.

1 comment:

Nexuiz said...

My view is that as long the economy continues to contract, the FED and other Central Banks will continue printing. Gold and commodities can only go up. The upside to bonds is limited, but the downside is not. Staying long Gold makes the most sense.