Biggest News Of The Morning: PIMCO Shorting US Debt And How To Trade It (UUP, TBT, TLT)

Over the weekend, it became known that PIMCO, the world's largest bond fund, and turned the tables and was short U.S. government debt, after holding U.S. Treasuries for so long.

It was recently made known that PIMCO had sold out of all it's U.S. government-related holdings, but this is a stark contrast in philosophy.

According to the firm's website, PIMCO's $236 billion Total Return Fund held -3% in U.S. government debt, including U.S. Treasuries, down from zero in February.

Bill Gross, the fund's manager, has questioned who will buy government debt after the Federal Reserve ends its quantitative easing program.

If you believe that Gross is right in his decision to short U.S. debt, traders and investors can go long ProShares UltraShort 20+ Year Trea ETF (NYSE: TBT) and short iShares Barclays 20+ Yr Treas.Bond ETF (NYSE: TLT) in a pairs trade to capture the same moves that Gross is looking for.

Investors also have the option of going long TBT or TLT, but the above mentioned trade gives greater exposure, if you believe that yields on long dated Treasuries are set to rise substantially.