Pimpco Front Running Fed
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Transcript of Pimpco Front Running Fed
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Anyway, Gross' fund is now back to its boring old self: its TSY exposure is just 36% of total, asMBS has increased to the highest since September 2009, just before QE1 ended.
This time we have decided to frontrun Bill Gross, who is now frontrunning the Fed - Pimco hasonce again begun loading up on the security class that benefited the most from a "Big Bang" type
of QE announcement - MBS. We expect the September announcement to show this classallocation to have grown to at least 25 (and much more if Gross is once again buying on margin).
And the fact that Gross did not use margin cash to bid up MBS means that the Fed willmost certainly not announce QE2 next Tuesday. MS was correct in recanting. Whether thiswill be the case next month, as Gross looks at the November Fed meeting is unclear. If he doesthough, we will "guess" that his track record of predicting major Fed moves will move to 3 outof 3.
Pimco holdings by product type:
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Pimco holdings by maturity and average fund duration:
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