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Pimco Move Could Send More Investors Out of Treasurys

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posted on Mar, 10 2011 @ 04:56 PM

Pimco's decision to dump Treasury bonds from its biggest bond fund is being called a smart move by investment pros—and one that individual investors might want to follow.

Sentiment around the fixed-income sphere is that Pimco is merely biding its time until government debt prices get cheaper and yields start to rise, essentially confirmed by Gross when he said yields are not attractive enough at this point.

The question of who will be buying Treasurys is relevant as the final months count down in the Federal Reserve's program to buy another $600 billion in mostly shorter-term debt. Gross himself asked recently in an analysis who would buy Treasurys once the central bank backs out.

Further to articles appearing yesterday re Pimco's dumping of govt debt, there are concerns surfacing around whether others might begin following the same, as a couple of us here mentioned. Government debt just doesn't hold up to value as much as other investments. Whether this continues and others do follow may have some repercussions on the US dollar, particularly as the Fed reserve begins winding down its QE2 as June approaches.

The following article is also interesting, and a good interview there with Goss. The article seems a little more ominous than the positive spin on the headline:

PIMCO's Government Debt Dump Doesn't Signal Disaster, Analysts Say (VIDEO)


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