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Anyone selling US Govt. debt yet?
Old 04-11-2011, 09:36 PM   #1
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Anyone selling US Govt. debt yet?

Pimco shorts Treasuries, arguments over budget and debt ceiling. Is anyone selling US govt bonds and running to cash yet?

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Old 04-11-2011, 11:11 PM   #2
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My fixed income is down to 15% 4% GNMA, 4% CDs 7% misc plus 5% cash.

I have not figured out how to inexpensively short US govt bonds or I'd be tempted to do so. (That is why Gross and his partner are paid the big bucks).

The problem with cash is that earns no money with inflation rising, I am very conscious of the fact that why my SWR can probably drop below 3% and still provide me with an adequate income. My portfolio is not able to survive a negative real return for a long period of time.

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Old 04-12-2011, 12:29 AM   #3
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The US governemnt is not going to fail to pay and principal on it's obligations as it comes due.
I believe the risk, if any, is to the value of the dollar in terms of goods and services, and in terms other currencies, as well as interest rate risk.

If one is going to hold US dollars, and most of us US residents will tend to do so, US debt is as safe as any and safer than most. So we come down to maturity or duration risk, and IMO one must stay short which means horrible current real and nominal returns.

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Old 04-12-2011, 03:31 AM   #4
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Shortened durations last year. Put some fixed in a stable value fund. Short-term bond index.

The only intermediate bonds we hold are in some balanced funds.

My fixed allocation is at the right level... but have a little too much is in cash right now.

I am trying to figure out my approach for moving more money into bonds. I will probably begin to average money into a broader bond index later this year.

I will be watching rates over the next several years for two reasons:

  1. Purchase a nominal SPIA (Made in several purchases) - income supplement
  2. Build a Bond ladder (using part of our fixed allocation).
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Old 04-12-2011, 06:42 AM   #5
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Here are a couple of ways to short treasuries:

ProShares UltraShort 3-7 Year Treasury ETF
ProShares Short 7-10 Year Treasury ETF
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Old 04-12-2011, 07:16 AM   #6
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I just bought some VWAHX, following the "buy when there is blood on the streets" rule of thumb.
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Old 04-12-2011, 09:51 AM   #7
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If PIMCO is indeed shorting it is an interest rate play and not a solvency play. And I say if because one never really knows with Gross what is for public consumption vs. PIMCO trading/positions.

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