Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
6 January 2010
15:5536535#1
Pimco, the world's largest bond fund manager, has said that it is to start selling its holdings of UK government debt. Other global funds are likely to follow suit.
This looks like the first moves to downgrade UK Government debt, demonstrating a lack of confidence in the UK policy for debt reduction. For some time now the markets have been held up only by an expectation of a change of Government. It looks as if the PBR and the continued ostrich-like stance of the Labour Government are having an increasingly negative impact.
The effect to all of us will be an increase cost of government borrowing, making the need for cuts even greater and increasing the amount of cuts needed. It could also have inflationary impact.
It makes the job of the next Government that much more difficult and the pain that will be felt by the public worse. You think the loo closures are bad, just wait...
We need the election now.
Ross Miller
- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,709
6 January 2010
19:4236580#2
Actually Barry, what they said was they were selling down their holdings of sovereign bonds, without specifying whose bonds they were.
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
6 January 2010
19:5236583#3
My info is quite specific, UK Bonds, and this is from an industry source not a political one.
Ross Miller- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,709
6 January 2010
22:3136626#4
Mine was from Pimco's own press release
As they are the largest bond house in the world they will of course be holding a significant amount of UK government bonds and these will be included in any rationalisation of their portfolio.
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
6 January 2010
22:4436631#5
correct, Ross, they are indeed and if it was just them re-balancing the portfolio there would not be a case but there is a lot more going on here. The fact is the lack of a clear debt repayment plan, the continued spending promises of Brown, and the failure to acknowledge the scale of debt are worrying the markets. In the unlikely event that the polls turn against the Conservatives I can see a collapse in the bond markets. Indeed if Osborne fails to make a convincing case as well, publically, then it could happen despite any private assurances given to the markets.
