Two-Bits, Four-Bits, Six-Bits, A Dollar

Take time to the entirety of Bill Gross' new Investment Outlook.

In the meantime, pay special attention to these charts Gross uses in his commentary:

Chart 1: Who owns what percentage of the existing stock of Treasuries

Chart 2: Who has been buying the annual supply(which closely parallels the Federal deficit)

Chart 3: Who might step up to the plate if and when the Fed and its QE bat are retired.

Here is Gross's conclusion on the charts above: 

Basically, the recent game plan is as simple as the Ohio State Buckeyes’ “three yards and a cloud of dust” in the 1960s. When applied to the Treasury market it translates to this: The Treasury issues bonds and the Fed buys them. What could be simpler, and who’s to worry? This Sammy Scheme as I’ve described it in recentOutlooks is as foolproof as Ponzi and Madoff until… until… well, until it isn’t. Because like at the end of a typical chain letter, the legitimate corollary question is – Who will buy Treasuries when the Fed doesn’t?