Head bond vigilante brands Osborne’s strategy economic “suicide”

Gidoen Osborne's economic strategy has been savaged by the head bond vigilante Bill Gross, branding it "suicide", reports Left Foot Forward's Cormac Hollingsworth.

Remember this headline last year in the Daily Mail?

“Don’t invest in Britain: The UK economy sits ‘on a bed of nitroglycerine’, investors warned”

That was Bill Gross, as co-CEO, co-CIO of Pacific Investment Management (PIMCO) – the world’s biggest bond fund – he’s the biggest bond market vigilante out there.

He’s been a cheerleader for cutting deficits as quick as possible; he said a year ago:

“The UK is a must to avoid. Its gilts are resting on a bed of nitroglycerine.”

And in April this year, Mr Gross took a similar stance to the US bond market, but in addition to selling all his holdings he took the unusual step of selling more and went short.

Since then, growth has collapsed worldwide leading to record low yields in world bond yields. Mr Gross’s view (£) now is that it was a “mistake” to bet so heavily against the US markets.

We’ve been saying that the bond market is making it very clear we should be worried about growth and the deficit; Mr Gross’s language is always more pithy and to the point, telling Bloomberg Radio today:

“To do it [cut government spending] right now is almost suicidal.”

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20 Responses to “Head bond vigilante brands Osborne’s strategy economic “suicide””

  1. matt jordan

    Head bond vigilante brands Osborne’s strategy economic “suicide”: http://t.co/TS9FMCN reports @CormacHolly

  2. Mike Le-Surf

    Head bond vigilante brands Osborne’s strategy economic “suicide”: http://t.co/vwVYXfZ

  3. Cormac Hollingsworth

    Today 10yr German bonds went below 2%: @leftfootfwd: Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/JTqj2nb

  4. Alex Belardinelli

    RT @leftfootfwd: Head bond vigilante brands Osborne’s strategy economic “suicide”: http://t.co/pCLnb5V reports @CormacHolly

  5. J P Harrison

    RT @leftfootfwd: Head bond vigilante brands Osborne’s strategy economic “suicide”: http://t.co/pCLnb5V reports @CormacHolly

  6. Political Planet

    Head bond vigilante brands Osborne’s strategy economic “suicide”: Gidoen Osborne's economic strategy has been sa… http://t.co/H4BVsOI

  7. Duncan Stott

    So you’re saying listen to the man who is known to be mistake-prone. Rightio.

  8. Michael

    Head bond vigilante brands Osborne’s strategy economic “suicide” l Left Foot Forward – http://j.mp/okTK9N

  9. Ashley Wells

    Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/bftPRAm < Something else for @torypresshq to post? Perhaps not.

  10. Ashley Wells

    Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/PDd65DA <Something else for @torypresshq to post? Perhaps not

  11. Alex Braithwaite

    RT @leftfootfwd: Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/y18gr67

  12. Brian Moylan

    RT @_ashley_wells: Head bond vigilante brands #Osborne’s strategy economic “suicide” http://t.co/bW2BuSK … #ukpolitics #ukeconomy

  13. Alfred Camp

    #Osborne is warned that “To cut government spending right now is almost suicidal” by Bill Gross, CEO of #PIMCO! http://t.co/tDklc51

  14. Elaine S

    RT @_ashley_wells: Head bond vigilante brands #Osborne’s strategy economic “suicide” http://t.co/bW2BuSK … #ukpolitics #ukeconomy

  15. Tony Thomas

    Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/Dsw42i9

  16. Tangram

    Head bond vigilante brands Osborne™ strategy economic suicide | Left Foot Forward http://t.co/FWwPXnK

  17. Guido Fawkes

    He isn’t the head bond vigilante, he has lost his touch big time.

    He isn’t even in the top 100:

    The Wall Street Journal
    Pacific Investment Management Co.’s $245.5bn (€170.4bn) Total Return Fund, the world’s biggest bond fund run by Bill Gross, has returned 2.99% this year through Wednesday, underperforming its peers as the fixed income titan’s bearish view on Treasurys was undone by their bull run of the past few months.

    The Pimco fund ranks 157th out of 179 funds in the category of intermediate-term bond funds tracked by Lipper. Over the past three months, the vehicle has generated a return of negative 0.04%, compared with a return of 2.7% from the benchmark Barclays Capital Aggregate Bond Index, as per figures from Morningstar.

  18. London IWW

    Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/c0RvFSV | #UKeconomy

  19. Kim Blake

    Head bond vigilante brands Osborne’s strategy economic “suicide” http://t.co/c0RvFSV | #UKeconomy

  20. Cormac Hollingsworth

    Mr Bill Gross manages the Total Return Fund, the world’s largest bond mutual fund, the PIMCO Total Return Fund. $240.7 billion at December 2010. You are right that he under performed the market, that’s what happens when you short the market. This underperformance is very rare, and it’s prompted a rethink. The market has told him that he’s wrong in his view of an insolvent west, and he’s humble enough to take the lesson and tell the rest of us what he now thinks. He is the best bond fund manager out there, we should listen.

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