Bill Gross criticizes the bond market, stating that the longer-term Treasury yields are so low that the funds that buy them belong in the “investment garbage can.”
- The ten-year yields are likely to jump to 2% in the next year, from nearly 1.3% currently, pushing investors into a loss of around 3%.
- The onetime bond king stated that stocks could also fall into the category of “trash” if earnings growth dropped short of the high expectations.
- Gross, a co-founder of Pacific Investment Management Co., noted that cash has been trash for a long time, but there are now new contenders. Intermediate to long-term bond funds belong to the trash horizon.
- Bill Gross has adopted a bearish outlook on bonds for a long time now. In March, he said to Bloomberg TV that he started betting against Treasuries at nearly 1.25%.
In his Monday note, Gross implied that supply and demand dynamics are poised up against Treasuries, indicating that yields at current levels have “nowhere to go but up.”
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