Giant investment management company PIMCO isn't particularly worried about deflation. In fact, it's so convinced that prolonged falling prices won't plague the U.S. that it's essentially bet on the contrary. Miles Weiss at Bloomberg reports that the bond fund has made an $8.1 billion wager on its certainty:
That's the notional value of long-term derivative contracts tied to the U.S. consumer price index that Pimco's mutual funds entered into during the first half of this year, according to a regulatory filing. The funds received $70.5 million in up-front premiums under these contracts, known as inflation floors, in return for agreeing to pay investors should prices decline in the 10 years ending in 2020.
Read the full story at Bloomberg.
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