PIMCO
Renewed investor interest in subprime mortgage investmentsPosted by RJ and Makay on Feb 21, 2012 |
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Investor perception that the U.S. housing market may be on the rebound is supporting renewed interest in once-toxic mortgage bonds that were at the center of the financial crisis, according to a recent Wall Street Journal article. Some distressed mortgage-backed bonds have registered double-digit percentage gains this year. The rally has brought investors back to a market sector that was ravaged between 2007 and 2009.
Fannie Mae has issued analyses this week that reports a 50% chance of a double dip recession. The firm’s Economics and Mortgage Market Analysis Group predicts that total 2011 U.S. economic growth will come in around 1.4%, down from 3.1% in 2010. Looking further ahead, the company sees 2012 economic growth at only 2%, well off its original 2012 forecast of 3.1% made last month.
PIMCO’s Bill Gross, head of the world’s largest bond fund, says that the recent Washington deficit deal to cut government spending and raise the borrowing capacity of the U. S. does not make a significant dent in the deficit. PIMCO’s Total Return Fund, with assets of $243 billion, held 8 percent in U.S. Treasuries and treasury-related securities at the end of June.
