Bond King Says Forget QE, Watch This Instead (CNBC)
Pimco CEO Bill Gross isn’t too worried about when the Fed will actually begin tapering its quantitative-easing (QE) program. That’s because there’s another, more important, indicator for him that will help guide his investments: the federal funds rate or the rate at which banks lend money to each other overnight. Gross claims it’s the de facto tool of choice for the Federal Reserve, once QE begins to wind down. For him, once QE is tapered, and eventually ended, there will be enough liquidity and certainty in the markets that the projected 1 percent rise in the federal funds rate in 2015 and 2016 won’t happen. That’s why his $250 billion Total Return Fund is long bonds and why you may want to be long in bonds, too.
Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:
Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.
Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers: