PIMCO Sees Short-Term Debt Rallying After Summers Quits Race

Pacific Investment Management Co., which runs the world’s biggest bond fund, says short-term Treasuries will be among the biggest beneficiaries after Lawrence Summers quit the race to head the Federal Reserve.

The former Treasury secretary withdrew from consideration in a letter to President Barack Obama yesterday, ending speculation he would undo the bank’s policies aimed at holding down borrowing costs. Fed Vice Chairman Janet Yellen had also been mentioned by Obama as a candidate for the chairman role, and she’s now the front-runner for the job when Ben S. Bernanke’s term expires in January, according to Mohamed El-Erian, Pimco’s chief executive and co-chief investment officer.

“Markets will likely interpret this as significantly increasing the probability of broad policy continuity at the Fed,” El-Erian wrote in a commentary on the Business Insider website. “This would be seen as being particularly supportive for the front end of the Treasury curve,” referring to the spectrum of maturities.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu