PIMCO goes short US government debt, raises cash holdings

SINGAPORE, April 11 (Reuters) – PIMCO has shifted to a short
position in U.S. government-related debt in the world’s largest
bond fund, while also raising cash holdings in a sign of the
asset manager’s serious concerns about the U.S. fiscal outlook.

The portion of PIMCO’s $236 billion Total Return Fund held
in U.S. government debt, including U.S. Treasuries, was -3
percent of total assets in the fund as of March, down from zero
in February, the firm’s website showed.

Cash equivalents, securities with maturities of less than a
year, rose to 31 percent of the fund’s assets compared with 24
percent in February.

PIMCO and its outspoken co-chief investment officer Bill
Gross have been raising alarm this year about who will support
Treasuries once the Federal Reserve ends its bond purchase
program as scheduled in June.

The Newport, California-based fund manager shed all its U.S.
government-related debt holdings earlier this year and has begun
to wager against the asset class.

Washington narrowly averted a government shutdown on
Saturday after Democrats and Republicans agreed on cutting $38
billion in spending for the fiscal year. [ID:nN09197615]

The 11th hour compromise probably had little impact on the
investment strategies of Gross, who said in an April newsletter
that the U.S. government was “out-Greeking the Greeks.”

The entire U.S. yield curve has moved higher since the Fed
began its second quantitative easing program in November 2010.
Yields on 10-year notes have risen 80 basis points since then to
3.59 percent.

(Reporting by Kevin Plumberg)

PIMCO goes short US government debt, raises cash holdings