Saturday, March 12, 2011

Bear Trader: on Interest Rates

PIMCO, the world's largest and by far the most influential fixed income (bonds) shop, run by the very famous Bill Gross and others of similar mega - stardom - the most prestigious of the most prestigious - have sold all of their US Treasury, Fannies, Freddies, and similar it became clear today. They hold essentially no municipals or State paper either.

One expects the real risk of an increase of 10 to 20% in interest rates is upon us (could be more) or else PIMCO would not have sold. Also means they expect an acceleration of inflation. This sort of stuff is bearish for stocks.

"Quantitative Easing" is coming home to roost. The Fed has been buying more than half of newly auctioned Treasury issues with
"created out of thin air" money since last fall.

This could be big.

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