WBrief: Pimco cutting exposure to US and UK - Spear's Magazine

WBrief: Pimco cutting exposure to US and UK

Pacific Investment Management, or Pimco, the world’s biggest bond fund, is cutting back its interest rate exposure in the US and UK, citing its worries about the sheer scale of public borrowing by these countries’ governments, media reports said.

Pacific Investment Management, or Pimco, the world’s biggest bond fund, is cutting back its interest rate exposure in the US and UK, citing its worries about the sheer scale of public borrowing by these countries’ governments, media reports said.

Managing director Paul McCulley reportedly said the supply/demand balance for US and UK government debt was likely to suffer as governments stepped up borrowing, and as buying by central banks eventually declined.

“We’re probably going to have a $1.4 trillion deficit this year without the Fed on the buy side of the market for duration,” he said of US Treasuries.

“There is major uncertainty about how the supply/demand equation for duration will resolve itself when the Fed is out of the picture,” he said.

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