Tags: pimco | bond | treasurys | government

Pimco Increases Government Bond Stake Just in Time for Selloff

Image: Pimco Increases Government Bond Stake Just in Time for Selloff

Monday, 14 Mar 2016 07:30 AM

The $87.8 billion Pimco Total Return Fund loaded up on U.S. government securities just in time for a tumble in the market.

Government and related debt comprised 35 percent of holdings at the end of February, the most in a year, according to the fund reports on the company’s website. Treasurys have declined 1.2 percent in the past month, based on the Bloomberg World Bond Indexes tracking 26 nations. The only market that has fallen more is Canada. 

It’s time to move into investment-grade corporate bonds and other credit products because the U.S. economy will probably avoid a recession, Mark Kiesel, one of the three Total Return managers, said this week. Benchmark 10-year U.S. yields climbed to the highest level in more than a month as a flight-to-quality rally from earlier in the year eased and a February jobs gain kept alive forecasts for the Federal Reserve to raise interest rates.

Ten-year yields were little changed at 1.95 percent as of 6:45 a.m. in London, according to Bloomberg Bond Trader data. They were as high as 1.955 percent, which is the most since Feb. 1. The price of the 1.625 percent note due in February 2026 was 97 1/8. Treasurys headed for a fourth weekly decline, the longest run of losses since May.

Japan’s 10-year bond yielded minus 0.01 percent, rising from the record low of negative 0.1 percent earlier this week.

‘Upward Pressure’

“There’s been some upward pressure on yields in the past few weeks,” said Yusuke Ito, a senior investor in Tokyo for Mizuho Asset Management, which oversees about $44.3 billion. “The decline in January and February was too sharp so I don’t think that is going to be repeated.”

In addition to Treasurys, the Total Return Fund’s stake in government securities can include related investments such as inflation-protected bonds, futures contracts and agency debt, according to the Pimco website.

The fund, run by Pacific Investment Management Co. in Newport Beach, California, has fallen 0.2 percent in the past year, lagging behind 64 percent of its peers, according to data compiled by Bloomberg.


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The $87.8 billion Pimco Total Return Fund loaded up on U.S. government securities just in time for a tumble in the market.Government and related debt comprised 35 percent of holdings at the end of February, the most in a year, according to the fund reports on the company's...
pimco, bond, treasurys, government
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2016-30-14
Monday, 14 Mar 2016 07:30 AM
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