Gross at odds with Street on rates


"Being different is absolutely essential if you want a chance at being superior," says Howard Marks. Hoping to return to the top of the heap in fixed income performance, Bill Gross is at odds with many on the Street, loading the portfolio of the Total Return Fund (ETF: BOND) with Treasurys in the belly of the curve.

The play is a bet on Gross' "new neutral," in which the neutral Fed Funds rate is at least a couple of hundred basis points less than commonly believed. If he's right, Treasurys with duration in the 3-7 year area should benefit the most as rate hikes are postponed or come in at a far slower pace.

"Once they see the whites of the eyes of full employment, they will want to normalize rates at a faster clip," says Jonathan Beinner, co-head of global fixed income at Goldman Sachs Asset Management, summing up the conventional Street wisdom.

ETFs: AGG, BOND, BND, BIV, SCHZ, LAG, SAGG, GBF, GVI, SHY, BIL, SHV, VGSH, SCHO, SST, TUZ, DTUL, DTUS

Previously: Pimco: "New neutral" explains Treasury rally

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Comments (5)
  • bbro
    , contributor
    Comments (11234) | Send Message
     
    Follow the Deposits to Loans Ratio....
    29 May 2014, 12:37 PM Reply Like
  • gespecht
    , contributor
    Comments (411) | Send Message
     
    Please elaborate to help me understand. Thanks
    29 May 2014, 09:32 PM Reply Like
  • snoopy44
    , contributor
    Comments (1492) | Send Message
     
    Goldman Sachs comment is ludicrous. "once they see the whites of their eyes with full employment". Sorry but we are about as far away from "full employment" as we can be. Right now we have 30 million people of working age out of the labor force. What part of "jobs depression" does Mr. Beinner not understand? Only in the cuckoo world of Wall St. could delusional comments like this be reported.
    29 May 2014, 12:45 PM Reply Like
  • Mike in Louisiana
    , contributor
    Comments (5) | Send Message
     
    Gross is correct that the Fed will raise rates slower than expected.
    29 May 2014, 02:57 PM Reply Like
  • gespecht
    , contributor
    Comments (411) | Send Message
     
    We've been hearing the rates were going to rise since about 1990. I can't wait for the day. Us baby boomers will die before we see it. They can't afford to let us make a return on our savings or it will break the government. How else will the leaches on society survive?
    29 May 2014, 09:47 PM Reply Like
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