Turner Investment Partners will buy two to five-year paper and sell its eight to 20-year Treasuries, STRIPs, TIPs and 6-6.5% pass-throughs in the third quarter, when it expects the economy to begin improving. Declining to comment on how much of an allocation change he will make, Jim Midanek, who manages $700 million for the firm, concedes "this will happen once the excessive easing expectations come out of the market and the market backs up across the board."
"The weaker numbers don't represent long term deterioration," says the Walnut Creek, Calif.-based Midanek, "we think that the economy will recover quicker and inflation will increasingly be a thorn." He expects the Federal Reserve to ease another 50 basis points sooner rather than later. He is short the Lehman Brothers Aggregate index by 0.38 years with a duration of 4.63 years, his portfolio is allocated 45% pass-throughs, 30% Treasuries and 25% in asset backed and commercial mortgage backed securities.
