NO KIDDING! Pimco Load Up on Mortgage Bonds....

wow! you want proof that money managers are desperate for relative returns. read this piece and you know what i mean. when you increase the mortgage holdings close to historic highs in the face of a slumping and often crashing housing market you know that fundamentals are only the 2nd thought.... the money has to go somewhere......i hope that they have only invested in the aaa tranches of the mortgages. the subprime tranches are crashing. and make sure you see what kind of crap is aaa ratet!!!!http://wallstreetexaminer.com/blogs/winter/?p=321#more-321. a must read from russ winter!)




es geht einzig und alleine um relative performance. anders ist es nicht zu erklären das im angesicht eines taumelnden immomarktes die hyothekenallokation auf neue hochs geschraubt wird. denke pimco hat zumindest in den aaa tranchen investiert. im supbrime sektor geht gerade das große zittern um (inklusive crashender anleihen)should be good news to mortgage bond investors that ...../ muss wohl ne gute nachricht sein......

Foreclosures increased 94 percent last year to 157,417 homes in California, as homeowners struggle with fast-rising home payments and a slow-selling market, according to ... ForeclosureS.com. Nationwide, almost 971,000 foreclosure filings were reported last year, 51 percent more than the 641,000 in 2005, according to the annual report. ( and the pace is accelerating....../ uund das tempo nimmt rapide zu)

Jan. 16 (Bloomberg) -- Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., has pared his Treasury holdings to the lowest in six months.

Gross and a growing number of investors are reducing Treasury bonds in favor of mortgage-backed securities as expectations for lower interest rates this year fade.

Pimco has allocated more than half of the $100 billion Total Return Fund to mortgage bonds and reduced holdings of Treasuries to 7 percent as of November, .......

...... He has been predicting bonds will rally this year as a weakening U.S. housing market prompts the Fed to cut rates.

Fund managers had an average 26 percent of their money in mortgages as of Jan. 5, the most in four months, ...... That's up from 19 percent on Oct. 13 when traders were anticipating the Federal Reserve would reduce its target for overnight loans between banks in this year's first quarter.

``We're looking for opportunities to add exposure to mortgages,'' said Jeff Given, part of a group managing $10 billion of bonds at John Hancock Advisers LLC in Boston. The Treasury rally has ``run out of steam.''

Yield Advantage
Treasuries returned 3.11 percent in 2006, less than the 5.32 percent gain on mortgages, ....

.... Investors in the futures markets now see no chance for a rate cut in the first quarter,....

....Bonds created from pools of mortgages fell less than Treasuries last week, dropping 0.34 percent to yield on average 5.63 percent, according to data compiled by Merrill Lynch. Mortgages returned 7.51 percent on average in the past 20 years, compared with 7.01 percent for Treasuries,

Higher Yields
``Mortgages yield so much more than Treasuries right now,''.......``It's such a strong edge that it's hard for investors to lose.'' (speaking of excess liquidity.....)

Mortgages usually outperform government bonds when interest rates are steady or rising because homeowners are less likely to prepay the loans, reducing the risk investors get their money back sooner than they anticipate.

Money managers were the most bullish about mortgage bonds in 22 months, ....

good timing...:-) unfortunately even the higher tranches of the mbs market includes also the financing of this..... and with property values falling.......

schon ein bemerkenswertes timing. selbst die a tranchen beinhalten die finanzierung dieser auswüchse......das die immowerte jetzt fallen ist zudem wenig hilfreich.....

Investors are adding the securities even as the housing market strengthens, raising the risk of early mortgage repayments. ........(hahahaha, strengthens?!?)

`The only time you lose from this strategy is if there's a strong rally'' ...... ``You probably don't see much upside unless you're predicting a recession.''