Pimco limiting U.S. Treasuries exposure as supply builds

November 5, 2008 by · Leave a Comment
Filed under: Currency News 

Good move on their part.  With the amount of issuing that is going to take place over the next 12 months, I would not want to have too much into treasuries.  Many economist are calling the dollar, “the next bubble to burst”.   Now with President-elect Obama, he needs to get serious about creating jobs in our country.  

I would say infrastructure in our highway system, transportation (rail) and energy should be his priority in reverse order.   These type of projects are great for creating jobs.  I would also do a mix of federal programs and private programs through our bidding process will be a nice balance.  I think we are going to start seeing inflation pick up as soon as people start feeling more confident and that will be are next major crisis.  You really notice inflation when the velocity of money speeds up through economic activity.

Release:

Fund manager Pimco is limiting its Treasury holdings amid expectations the United States will ramp up issuance to pay for a slew of new programs aimed at easing the credit crisis, Chief Executive Mohamed El-Erian told Reuters late Tuesday.

 “Reflecting the prospects of much larger issuance, we have been limiting our exposure to Treasuries, especially beyond the short-dated ones,” El-Erian said. Pimco manages the world’s largest bond fund.

His comments came after Democrat Barack Obama was elected U.S. president.

The United States is expected to sell huge amounts of debt to pay for a wide range of programs, including a $700 billion rescue package aimed at thawing frozen credit markets.

Source: Reuters

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