"I think Bernanke and company are committed to the taper," says Bill Gross, reacting to this morning's jobs report. "It will be taper-light as opposed to taper-strong," he adds, expecting a $10B reduction (from $85B) in the current monthly pace of bond purchases.
Bond stars like Gross, Jeff Gundlach, and Dan Fuss have seen a large exit of cash from funds since the May fixed-income selloff began. Pimco's $251B Total Return Fund (ETF version BOND) has lost 14% of AUM through a combination of withdrawals and losses.
The Fed Funds rate remains at zero, reminds Gross, and because of that investors should stick with short-duration Treasurys (SHY) as well as paper set to gain value on credit improvement (LQD, HYG, JNK).