NEW YORK (CNNMoney) -- Pimco's Total Return Fund (PTTRX), the world's biggest bond fund, slashed its exposure to U.S. government debt to zero last month.
It's the second month in a row that well-known fund manager Bill Gross has drastically reduced Pimco's exposure to U.S. government debt.
Gross has been very vocal about his feelings toward U.S. interest rates, saying in January that they were "robbing" investors and that U.S. government debt should be "exorcized" from investors' portfolios.
The Total Return Fund held about 22% of its holdings in U.S. government debt as recently as December, but reduced those holdings to about 12% in January.
Gross's comments typically carry considerable influence on investors because his Total Return Fund is by far the world's largest bond fund with more than $240 billion in assets under management. It's also the best-performing bond fund for the last 15 years, according to Morningstar.com.
In his February newsletter, Gross said he believes U.S. Treasuries are trading at a yield of 1.5 percentage points below where they should be historically, making them an unattractive place to invest for the time being. Gross also reiterated that stocks and bonds may struggle this summer when the Federal Reserve ends its second quantitative easing program. [...]
And what affect will this have on people's confidence in US bonds? It's not hard to guess.
There were warnings last year that the Bond Market won't wait much longer for us to get our house in order, to balance our budget. Is that what's coming to pass now?