Pacific Investment Management Company (Pimco), which runs the Total Return fund, the world's largest bond fund, is reducing its holdings of treasuries and gilts, according Paul McCulley, its managing director.

The announcement was a further signal of market anticipation that bond prices are set to fall this year, as central banks begin their exit from extraordinarily accommodative monetary policy, and as governments in both the US and the UK raise their borrowing to all time highs.

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