Telegraph: Pimco cuts holding of UK and US government bonds

Pimco, which runs the world's biggest bond fund, is cutting back its holdings of UK and US government debt as the two countries grapple with record deficits. In an outlook for 2010 published on its website, Paul McCulley, a managing director at Pimco, said that "we are currently cutting back in the US and UK because, as mentioned before, supply and demand dynamics are likely to be negatively affected as borrowing rises and central bank buying declines." It was a view echoed on Monday by Mike Amey, who oversees UK fixed income at Pimco in London. "Those areas of the bond market that have had greatest support from central banks will be most vulnerable as that support comes to an end,” said Mr Amey.