Pimco‘s flagship fund (and the largest mutual fund in the world), Total Return, has been buying Treasurys again just a month or two since manager Bill Gross very vocally expressed his dislike for their risk-reward profile at current yields.
This could mean that Pimco sees the recent “soft patch” in economic data as being much more significant than the blip you’re hearing about elsewhere.
Here’s Jennifer Ablan at Reuters:
Bill Gross, the manager of the world’s largest bond fund, has soured further on the economic outlook and has jacked up buying of U.S. Treasuries in June, according to PIMCO’s website on Tuesday.
Gross’ $243 billion Total Return Fund held 8.0 percent in U.S. Treasuries and Treasury-related securities as of the end of June 30, up from 5.0 percent as of the end of May — a 60 percent increase.
Gross has publicly stated that the only way he’d add a large Treasury position is if he felt the US could be headed into recession. His purchases, while modest, might speak volumes about his outlook.