PIMCO Buying Short-Term Treasuries Even As Fidelity Sells

The nation’s largest manager of money market mutual funds disclosed Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit, but the surprise announcement from Fidelity Investments failed to deter Pimco founder Bill Gross, who said his firm continues to buy debt.

“We’re doing exactly the opposite actually … probably buying what Fidelity is selling,” said Gross, manager of the world’s largest bond fund, on “Closing Bell.”

The difference in strategy has to do with how the two firms work, he said. In the case of a government default—even if it lasts just an hour or a day—a money market mutual fund is required to mark down its debt to zero. Pimco on the other hand, can stomach the volatility.

Gross said the odds are 1 million to one that the U.S. will not default on its debt, but that doesn’t mean the threat isn’t affecting markets.

CNBC

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