Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the Federal Reserve will probably signal it plans to arrange a third round of debt purchases when policy makers meet in April.
While Fed officials upgraded the outlook for the U.S. economy at their March 13 meeting, they reiterated their intent to keep interest rates near zero until at least late 2014. The central bank under Chairman Ben S. Bernanke has purchased $2.3 trillion of bonds in two rounds of so-called quantitative easing, known as QE1 and QE2.
The Fed is “likely to hint” at QE3 at its April 25 gathering, Gross wrote on Twitter.
Housing reports last week showed a key part of the U.S. economy remains under pressure. The Commerce Department said March 23 that new home sales fell to a 313,000 annual pace in February, the slowest since October. Earlier in the week, the National Association of Realtors said existing-home sales eased to a 4.59 million rate last month from January’s 4.63 million.
Bernanke said March 23 that central bankers “have had to deploy a variety of new tools” to implement monetary policy.
Gross reduced holdings of Treasuries last month for the first time since February 2011, when he cut his stake of the securities to zero.
He lowered the proportion of U.S. government securities in Pimco’s $252 billion Total Return Fund (PTTRX) to 37 percent of assets from 38 percent in January, according to a report on the company’s website. He raised mortgages to 52 from 50 percent.
Wes Goodman -Bloomberg Mar 25, 2012