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业内权威如何看美债:“老债王”认为已被高估,PIMCO正如此布局

How do industry authorities view US debt: The “king of old debt” thinks it is overvalued; PIMCO is laying out this way

cls.cn ·  Jan 10 12:41

① At the beginning of this week, when the bond market was relatively uneventful, many authorities and institutions in the bond sector also expressed their views on the current state of US debt; ② This includes “old debt king” Bill Gross (Bill Gross) and PIMCO, the world's largest debt base that he personally built in the past.

Financial Services Association, January 10. As the critical US CPI data is about to be released later this week, yields on US bonds of various maturities on Tuesday (January 9) generally fluctuated limited, and the large number of government bonds and corporate bonds to be issued soon also put some pressure on bond prices.

Market data shows that US bond yields of various maturities generally fell into a narrow range of consolidation overnight. The fluctuation range of 2-year US bond yields throughout the day did not exceed 4 basis points. By the end of the New York session, 2-year US Treasury yields fell 1 basis point to 4.375%, 5-year US Treasury yields fell 1.6 basis points to 3.978%, 10-year US Treasury yields fell 1.3 basis points to 4.02%, and 30-year US Treasury yields fell 0.6 basis points to 4.189%.

The US Treasury bid for 52 billion US dollars of three-year treasury bonds on Tuesday. The bid interest rate was 4.105%, lower than the yield for the same period in the secondary market at the end of the bid. This shows that investors are willing to hold this batch of bonds without a premium. The bid multiplier for measuring demand was 2.67 times, better than 2.42 times last month, but slightly below the average of 2.69 times.

The increase in US bond yields narrowed briefly after the bid, but overall fluctuations were limited. The US Treasury will also bid on 10-year and 30-year treasury bonds on Wednesday and Thursday, respectively.

Angelo Manolatos, macro strategist at Wells Fargo Bank, said, “The current situation in the bond market is very unstable, and people are in the price discovery stage. The main fundamental situation at present is that we are at the peak of policy interest rates. The Federal Reserve is moving closer to an easing model.”

The US Consumer Price Index (CPI) for December, which will be announced on Thursday, is expected to provide more clues as to when the Federal Reserve may start cutting interest rates. The US Producer Price Index (PPI) will also be announced on Friday.

It is worth mentioning that at the beginning of this week, when the bond market was relatively uneventful, many authority figures and institutions in the bond sector also expressed their views on the current state of US debt, including the “old debt king” Bill Gross (Bill Gross) and PIMCO, the world's largest debt fund created by himself in the past.

“King of Old Debts”: 10-year US bonds are overvalued

At the end of last year, the “king of old debt” Gross got the general trend right when it came to the US bond yield trend. Recently, however, he said that he is now staying away from national debt.

Gross wrote in a post posted on the X platform that 10-year US bonds are already overvalued. If you need to buy bonds, a period inflation-protected bond with a yield of 1.80% is a better choice.

Gross co-founded Pacific Investment Management Company PIMCO with others in the early 1970s. At the end of last year, he made a big bet that the Federal Reserve would cut interest rates in 2024 and profiteed millions of dollars from the sharp rise in bonds. Earlier, in August of last year, he warned that bond bulls had been misled, and US bond yields actually hit a 16-year high in the next two months.

At the beginning of this year, global bond prices declined markedly last week due to traders generally worried that the rise in late 2023 would be too fast or too sharp. The yield on the benchmark US 10-year Treasury jumped 17 basis points last week, the biggest increase since October last year. The inverse between bond yields and prices.

Gross said in another recent post that for those interested in the bond market, short-term bonds are a better choice right now. It is convinced that the 10-year/2-year yield curve will end the inversion and return to a positive value.

The 10-year US Treasury yield is still about 35 basis points lower than the 2-year US Treasury yield. This most high-profile yield curve has been inverted since July 2022, and some people think this indicates that the economy is about to fall into recession. And for most of the past year, investors have been betting that this yield curve will re-normalize.

This is how PIMCO is laid out

US bond management company PIMCO said on Tuesday that although the market expects the US economy to experience a so-called soft landing in the context of the Fed's interest rate cuts this year, it is still too early to announce overcoming inflation, and the risk of recession still exists.

The company said in a report that in the event of a recession, bonds are expected to outperform stocks in 2024, and since bond yields have begun to rise, bonds are expected to provide a buffer against the re-acceleration of inflation.

Despite this, after expectations of the Federal Reserve's interest rate cut at the end of last year boosted a rapid rebound in bonds, PIMCO is currently neutral about the so-called long-term period.

PIMCO economist Tiffany Wilding and global fixed income chief investment officer Andrew Balls wrote in the report, “Currently, we don't think extending the term is an excellent trading tactic. The recent rebound in the bond market has brought global bond yields back to what we expected, and in the face of the changing balance of inflation and growth risks, we have been neutral for a long time.”

Looking ahead, PIMCO believes that long-term bonds may once again be affected by concerns about the widening US fiscal deficit and increased issuance of government bonds. This concern led to the sell-off of long-term bonds last year before expectations of interest rate cuts injected optimism into the market.

PIMCO anticipates that the long-term end of the US debt curve may weaken further due to anxiety about increased supply caused by increased issuance of bonds needed to fund huge fiscal deficits. PIMCO currently favors treasury bonds with a term of 5 to 10 years, and takes the position of “reducing holdings” on treasury bonds with a term of 30 years.

Editor/Corrine

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