< HOME  Tuesday, June 20, 2006

BIG Slide Begins: World's Biggest Bond Fund leads the way

Attention all bond investors: In May, Bill Gross, manager of the world's biggest bond fund, cut holdings of U.S. Treasury securities and agency debt to their lowest levels in four years as the U.S. Federal Reserve raised interest rates at a 16th consecutive policy meeting.

Gross, chief investment officer at Pacific Investment Management Co. in Newport Beach, California, reduced his Total Return Fund's holdings of Treasury bonds and securities sold by government-chartered Fannie Mae and Freddie Mac for a seventh straight month. Holdings of U.S. debt dropped to 6 percent in May, the fund's lowest amount since April 2002, from 7 percent in April, according to Pimco's Web site.
What does this mean? First, it means that prospects are looking grim in the real estate market. Second, PIMCO decided that it isn't prudent to hold on to Treasury debt now at such low rates when alternatively they can (1) bleed people who need cash, and in the meantime (2) wait until Treasury yields are sky high before sticking it to the government, a.k.a. taxpayers.
Rising interest rates have pushed Gross to move his holdings away from Treasury holdings and other long-term government debt and into cash and its equivalents. He raised the fund's holdings of cash and securities with a maturity of less than one year for a sixth straight month to 34 percent in May from 32 percent in April.

He also cut holdings of mortgage-backed securities to 56 percent in May from 57 percent in April. Mortgage bonds pay interest from a pool of mortgages.
And no one wants to be left holding that worthless bag of debt. The mortgage-backed bond market is imploding.

Life is going to get increasingly harder for average Americans who must either labor over every dollar they need to survive, or borrow it at interest.


At Tuesday, June 20, 2006, Blogger borkafatty said...

borrow borrow borrow does anyone work for a living anymore? shit i work 2 jobs to support my family 65 hours a week, refied one time to put an addition on my home (new baby) (and a pool) but i bought my home in 1993 for $86500 now they say it is worth $320,000??????????????

to whom i ask?

This is all going to end real bad, but ill sit back and watch and keep my fortress ready for the fight!

At Tuesday, June 20, 2006, Blogger Red Tulips said...

The total fiscal irresponsibility of the government is something qrswave and I agree on.

This situation is getting increasingly intolerable, and it is completely unsustainable.

At Tuesday, June 20, 2006, Blogger Upfront Broker said...


And now people will have to pay much more than they should. Try this flat fee broker in WA and ID to at least save some money.

At Tuesday, June 20, 2006, Anonymous Anonymous said...

Buy Gold, Silver and guns. This gov't taps your phones (talk to people in person). This gov't cages protestors (don't bother, most of the people there are police, CIA and FBI). The gov't forces Amazon to stop stocking books like "America Deceived" by E.A. Blayre III (Support indy media and internet sites like this). The gov't prints paper money and stops publishing M3 (buy gold and silver).
Last link (before Google Books gets a call from the administration):

At Tuesday, June 20, 2006, Blogger Citisucks said...

The economy is about to collapse. What is going on know resembles what happened in the 1920's where people charged things on credit that they could not afford to pay back, not to mention ridiculous government spending. I get a good laugh at the idiots who bought SUV's that I know of only to now have those SUV's repossed and to now see those people having to take the bus. The economy is going to hell and it is going there fast.

At Tuesday, June 20, 2006, Anonymous Anonymous said...

If we are lucky the economy will muddle along for another year. Starting in late 2007 or early 2008 everything will go down....stocks, bonds, commodities and real estate as a vicious round of deflation lowers all boats. Bonds will initially rally but when people realize the US Government is a scam built on a lie, confidence in the system will be hard to find. Use this time to payoff debt. Mutual funds that are SHORT the S&P 500 will be a solid place for your money. Funds that hold short term foreign bonds may also be attractive.

At Tuesday, June 20, 2006, Blogger qrswave said...

Anon 11:02pm,

You're a broker, right?

I don't mean to be inhospitable, but we don't recommend bondbuying here. Collecting interest on money loaned is like stealing food from the womb of the unborn child.

We do, however, recommend equity investing but not with the dirtbags at the S&P 500.

At Tuesday, June 20, 2006, Anonymous Anonymous said...

qrs, the guy above was recommending an S&p SHORT FUND. There are funds that SHORT the Dow, or Nasdaq or S&p, they go up if the market goes down.

At Wednesday, June 21, 2006, Blogger qrswave said...

Exploitation is exploitation, whatever you call it.

If people don't start considering what happens at the other end of the equation, we'll never get out of the mess we're in.

'Windfall profits' don't come from nowhere. Someone always pays.

At Wednesday, June 21, 2006, Anonymous randY Poole said...

Hey People are thinking about puting Money in Eros. Theses Goves are doing just as bad. It's the Yen when they dump there dollors the Yen will go thur the roof. The Yen is the next world money. of course they plan to try the credit system. i can put 50,000 credits in every ones account, hell lets make it 100,000. of course they have every human by the balls then and the fact The most All the US sees this as the mark of the beast.

good luck ibm

At Wednesday, June 21, 2006, Blogger Citisucks said...

Exactly qrswave and don't you find it even more sketchy that this person posted there recommenedations for what we should do with our money annonymously.

The point is not about individual good, it is about the good of society as a whole and fighting the corporate terrorist bankers.

At Wednesday, June 21, 2006, Blogger borkafatty said...

I keep my money close and in a solid form :), anyway 2007 will be a nightmare for most of all the suckers that bought homes in 04/05 when those ARMS reset and your mortgage payment goes from $1300 TO $1900 in one months time the pain will be unreal.

Just for fun and to actually see what is going on out there I called a mortgage lender the other day (mistake 1 ) just to test the waters and see what the offers would be.

Now let me stress I said to the women on the other line i want nothing but a 30 year fixed, no fancy mortgages, a mom and pop 30 year..ok she said no problem.

How is your credit she said?

Fine i said to my knowledge, i have no credit card debt, i have no car payments just my motgage.

great she says

so she calls back and the first thing she says is your credit scores are low.

Low i said, how i owe no one nothing I have no lates..ah there is it she said...you were late on your mortgage...ready for this..in 1999..really i said yup and that is hurting you .. hmm i said.

So she turns around and said we can fix that for you, i put together 3 plans for you to help you fix your credit (by the way i think the whole credit thing is a big fucking scam)

so here are the plans



2 YEAR ARM WITH 5 FIXED IO (interest only)

Not one time did she offer me a 30 year fixed ..now i fell like i am being harrased by thi lunitic with her fancy loans..oh and by the way ..my so called bad credit score was 720 middle...so moral of the story here is Green Span got us here yes
But the lenders and the corporate bankers feed the fire to the tune of misery..

good luck out there folks, if you have a fancy mortgage, you might want to call someone who will call someone and so on and so fourth and walk away for your houses, get enough people doing that and it will create panic in the banking office.

At Wednesday, June 21, 2006, Blogger borkafatty said...

oh and the 1 late was a 30 day late due to the bank seeling my mortgage to another lender and i set the payment to the original lender who was suppose to transfer it ..well they did 30 days late..my fault no the banks and banks blow, as well as the services the supply

At Thursday, June 22, 2006, Blogger Citisucks said...

Credit ratings are a total scam. They are simply used to intimidate people into doing what the corporate terrorists want them to do. I don't know what my credit score is, nor do I care. People constantly lecture me on this and tell me how I will have horrible consequences, but guess what I haven't had any (and yes I am a "real worlder" and not a student).


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