Get out while 10yr rates are still under 3%.
In what is the biggest black eye for Bill Gross and the largest bond manager in the world, moments ago Bloomberg reported that the title of the world's largest mutual fund has just changed hands:
PIMCO TOTAL RETURN LOSES LARGEST MUTUAL FUND TITLE TO VANGUARD
GROSS'S PIMCO TOTAL RETURN BECAME LARGEST MUTUAL FUND IN 2008
PIMCO TOTAL RETURN HAD $247.9 BILLION IN ASSETS AS OF OCT. 31
This comes on the heels of what Reuters reports is the sixth consecutive month of outflows for the TRF, with $4.4 billion withdrawn in October, while on the other side Vanguard, now at $251 billion, has more than tripled in size since the end of 2008 as the scramble for equities in Bernanke's new normal has become the only game in town.
Looks like the bondpocalypse might come a little early. Bill Gross should be wearing diapers by now. We are approaching 3.0% on the 10yr, and the Fed is still buying! What happens when the Fed starts scaling back purchases? Who steps in behind them, and what if nobody does? Nothing good - I'll guarantee that much. Further, how can 'the great rotation' happen when equities are already overbought? We are likely to see liquidity and velocity hit rock bottom in short order, and what do you suppose that portends for credit creation? Nothing good - I'll guarantee that much.
Thursday, August 15, 2013 at 3:35 pm
Foreign holders dumped a whopping $40.8 billion in long-term Treasuries, the biggest exodus from bonds in the history of the U.S. Worse, June was actually the third month of mass dumping in the past four, for a total of $79 billion. China, the biggest holder of our bonds, unloaded $21.5 billion, while Japan, the second-largest holder, dumped $20.3 billion.