PIMCO's Bill Gross: Still Early/Wrong, And Now Even Earlier/Wronger. Bond Yields are Down.

Wall Street Journal ^ | 05/26/2011 | Mark Gongloff

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The yield on the 10-year Treasury note is now at 3.06%, its lowest of the year, well below its 200-day moving average and starting to worry the psychologically important 3% level, which it hasn’t broken since last December.

It will not break that level any time soon, however, Pimco chieftain Bill Gross declared to Bloomberg TV today. He once again stood by his call that bond yields will rise once the Fed stops buying bonds under its QE2 program in June, a call he has been making since early March, while watching bond yields march steadily lower.

Just two days ago, Mr. Gross said yields “may or may not” rise, which at first blush looked like an attempt to back slowly and quietly away from a position that has looked way too early, if not just plain wrong. It looks now like that was just a rhetorical flourish; he still thinks yields will rise.

What he’s still not being crystal clear about is Pimco’s position on Treasurys. As Zero Hedge points out, Bloomberg’s Tom Keene tried to pin him down on whether the bond fund was short Treasurys, and Gross didn’t really answer the question. He has been throwing up some smoke screens about whether the firm is really short Treasurys, for which many, including Zero Hedge, have taken him to task.