Pimco’s Gross Likes Bonds… Again; China Increases Treasury Holdings to Record High While World Sells

Pimco’s Gross Likes Bonds… Again (YahooFinance)

Anticipating no major U.S. policy changes until 2016, Pimco Founder and Co-CIO Bill Gross is buying more bonds. According to Gross, “Short term, we see a 10-year yield going down, prices going up. Long term — three to five years — I think that we are in a rising rate environment that the market is going to have to adjust to.” Talk about a market-timing play. With this additional bond buy, that brings Pimco’s $268 billion Total Return Fund to a total weighting of 38% bonds.

China Increases Treasury Holdings to Record High While World Sells (CNBC)

Even though much of the world was selling its U.S. bonds in May, China was buying. Already the single largest holder of U.S. Treasuries, China upped its holdings of U.S. government debt by some $25 billion, to a new record total of $1.316 trillion, according to the U.S. Treasury Department. The world’s second-largest holder of U.S. debt, didn’t see eye-to-eye with China and reduced its holding in May by $1.7 billion, to $1.11 trillion. The rest of the world seems to have sided with Japan, selling off $27.2 billion in U.S. debt. The sell-off was triggered in May, in part, by fear that the U.S. Federal Reserve would back off on its current stimulus package…  During that time, 10-year U.S. bond rates rose from 1.7 percent to 2.74 percent in early July. Which side of the bond question will investors land on? Well, that’s up to you.