Gross 'not braggin' after short-term Treasuries call

Gross tweeted: “Not braggin' but what did we tell you” about short-term treasuries.
SEP 20, 2013
Bill Gross got it right when he recommended short-maturity Treasuries this week. “Not braggin' but what did we tell you,” Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., wrote on Twitter Wednesday. The difference between five- and 30-year yields widened to as much as 2.38 percentage points today, the most in almost six months. Gross wrote on Twitter on Sept. 15 that investors would demand more yield to own long bonds versus five-year notes after Lawrence Summers quit the race to head the Federal Reserve. The former Treasury secretary's decision ended speculation that he would undo the central bank's policies aimed at holding down borrowing costs. The Fed unexpectedly refrained from reducing its $85 billion pace of monthly bond buying yesterday, saying it needs more evidence of lasting improvement in the economy. Futures contracts indicate investors are betting policy makers will wait longer before raising their target for overnight lending between banks, benefiting short-term Treasuries, those that are most sensitive what the central bank does with its benchmark. Vice Chairman Janet Yellen, a supporter of Bernanke's policies, is the top candidate to succeed him, according to people familiar with the process. Summers's decision to withdraw marks the beginning of the Yellen Fed, Gross said in his Twitter post Wednesday. Traders will have a “frontend friendly” market for a long time, he wrote, referring to the shortest Treasury maturities.

Fund Performance

Gross' $251.1 billion Total Return Fund has fallen 2.5 percent this year, underperforming about two-thirds of its peers, according to data compiled by Bloomberg. During the past five years, it has gained an average of 7.5 percent annually, ranking in the 89th percentile. Pimco, based in Newport Beach, California-based company is a unit of Munich-based insurer Allianz SE. The Fed left unchanged its outlook that its target interest rate will remain near zero “at least as long as” unemployment exceeds 6.5%, so long as the outlook for inflation is no higher than 2.5%, according to a statement after its two- day meeting concluded yesterday. Unemployment was 7.3% in August, and the central bank's preferred measure of cost increases in the economy was at 1.4 percent in July. The Fed has kept the target for its benchmark in a range of zero to 0.25 percent since 2008. (Bloomberg News)

Latest News

The power of cultivating personal connections
The power of cultivating personal connections

Relationships are key to our business but advisors are often slow to engage in specific activities designed to foster them.

A variety of succession options
A variety of succession options

Whichever path you go down, act now while you're still in control.

'I’ll never recommend bitcoin,' advisor insists
'I’ll never recommend bitcoin,' advisor insists

Pro-bitcoin professionals, however, say the cryptocurrency has ushered in change.

LPL raises target for advisors’ bonuses for first time in a decade
LPL raises target for advisors’ bonuses for first time in a decade

“LPL has evolved significantly over the last decade and still wants to scale up,” says one industry executive.

What do older Americans have to say about long-term care?
What do older Americans have to say about long-term care?

Survey findings from the Nationwide Retirement Institute offers pearls of planning wisdom from 60- to 65-year-olds, as well as insights into concerns.

SPONSORED The future of prospecting: Say goodbye to cold calls and hello to smart connections

Streamline your outreach with Aidentified's AI-driven solutions

SPONSORED A bumpy start to autumn but more positives ahead

This season’s market volatility: Positioning for rate relief, income growth and the AI rebound