Don’t Panic as Bond Market Ship Not Sinking, Pimco’s Gross Says – Bloomberg 06-26-13

Salient to Investors:

Bill Gross at Pimco said:

  • Bond yields and risk spreads were too low 2 months ago and global markets that were too leveraged are now reducing risk
  • The Fed tilted over-risked investors to one side of an overloaded and over-levered boat when discussing tapering, so don’t panic.
  • The majority of global economies, including the US, are not sinking: markets just had too much risk and too much hope for a constant QE and for the growth that it would produce.
  • Investors who are selling US government debt now are missing the influence of inflation on the Fed’s decisions – the market basically misinterpreted the growth and unemployment targets while leaving out inflation targets going forward.
  • We may have reached an inflection point of low Treasury, mortgage and corporate yields in late April, but this is overdone.

Bond-fund managers from Gross to Jeffrey Gundlach at DoubleLine Capital say it is a bad time to sell bonds because the economy is not strong enough to sustain higher borrowing costs.

US-listed bond mutual funds and ETFs saw record monthly redemptions through June 24.

Read the full article at  http://www.bloomberg.com/news/2013-06-27/don-t-panic-as-bond-market-ship-not-sinking-pimco-s-gross-says.html

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