Bill Gross Shorting the U.S. Government Bonds

Smart money is bolting the U.S. government bond market. Business Week reports:

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., last month cut U.S. government-related debt and boosted cash to be the largest of the Total Return Fund’s holdings.

Pimco’s $236 billion fund had minus 3 percent of its assets in government and related debt, the Newport Beach, California- based company said on its website, after reducing the position to zero in February. Cash and equivalents rose to 31 percent from 23 percent, making it the largest component for the first time in four years.

Got that? A $236 billion bond fund has MINUS 3 percent in government bonds, i.e. it's short U.S. government debt. Gross must have been really impressed with the savings coming out of the budget negotiations.