Pimco's Gross says jobs growth to spur Fed on quantitative easing

Mortgage Holdings

Gross cut the proportion of U.S. government and Treasury debt in his $270 billion Total Return Fund to 33 percent of assets in August from 35 percent the prior month, according to the latest data on Pimco’s website. Mortgages were his largest holdings at 51 percent, down from 52 percent in July.

The Total Return Fund gained 8 percent during the past year, beating 97 percent of its peers, according to data compiled by Bloomberg. The fund gained 0.4 percent in the past month, topping 85 percent of comparable funds.

ECB President Mario Draghi yesterday said policy makers agreed to an unlimited bond-purchase program to regain control of interest rates in the euro area and fight speculation of a currency breakup.

Treasuries are more attractive than German bunds, the refuge for investors in Europe, because the Fed is buying U.S. government debt, Mohamed El-Erian, Pimco’s chief executive officer and co-chief investment officer, said in a separate interview on Bloomberg Television’s “In the Loop” with Betty Liu.

Safe Havens

“The Fed will anchor the yield curve,” El-Erian said. “What the ECB is doing is very different. It’s buying peripheral debt and not bunds.”

U.S. government bonds have gained 2.1 percent this year, according to Bank of America Merrill Lynch index data. That compares with 2.6 percent for German bunds.

The benchmark 10-year yield slid seven basis points, or 0.07 percentage point, to 1.61 percent in New York. It touched 1.74 percent before the payrolls report, the highest level since Aug. 22. The price of the 1.625 percent note maturing in August 2022 gained 21/32, or $6.56 per $1,000 face, to 100 5/32.

The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000 jobs. Unemployment fell to 8.1 percent from 8.3 percent, and hourly earnings were unchanged, Labor Department figures showed today in Washington.

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