Pimco Favorites From Swaps to Peso Take Hit on Gross Resignation
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Bill Gross’s departure from Pacific Investment Management Co. is sparking a selloff in markets from credit derivatives to the Mexican peso as traders contemplate the potential fallout from the sudden exit of the world’s biggest bond trader.
Credit derivatives indexes that Pimco has used to wager billions weakened as traders speculated those positions will be among the easiest for the firm to unwind should it face a wave of redemptions. Treasuries slumped on concern Gross’s departure may prompt a shift away from U.S. government debt. Mexico’s currency and Italian and Spanish government bonds, other big bets by the firm managing almost $2 trillion of assets, also dropped.