PIMCO sells off all its U.S. debt

PIMCO Managing Director Bill Gross

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JEREMY HOBSON: Now let's get to this morning's news on U.S. government bonds. The biggest bond fund in the world PIMCO says it's gotten rid of all of its U.S. treasury bonds.

Our regular Thursday guest Diane Swonk is off today. Instead, we're joined live by our New York Bureau Chief Heidi Moore. Good morning.

HEIDI MOORE: Good morning Jeremy.

HOBSON: How significant is it that PIMCO is getting rid of its U.S. bonds?

MOORE: It's absolutely not the worst thing in the world. I think this shows that treasuries are absolutely at the top of their price, right? So the Federal Reserve has been buying up treasuries and about a trillion dollars-worth actually. So they're very expensive right now. And Bill Gross has been complaining about that for months and months, so from his perspective, he's selling them when he can get the best price. But it's not dire for the U.S. economy.

GUY LEBAS: Typically government bonds do well when the economy is poor. So by selling government bonds, Bill Gross is implicitly saying, "Hey, we expect conditions to improve a little bit."

Exactly. So what that really tells us right now is that, yes we may be in for some rough patches with inflation and so on, but really, if you take the money out of treasury bonds, you have to put it somewhere else, which is probably in company bonds. Which again, shows faith in the fact that we're going to have some resilience from the corporate sector.

HOBSON: And Heidi, I should say that was Guy LaBas of Janney Montgomery Scott. I'd recognize that voice anywhere, and you are Marketplace New York Bureau Chief Heidi Moore, thanks so much.

MOORE: Thank you.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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