What You Need to Know
- Even if bonds are likely to suffer losses, they still have a role to play in one’s portfolio given the economic uncertainties, he said.
Bill Gross, who has likened bonds to “garbage,” said a bear market in Treasuries is “no disaster.”
In his latest investment outlook, in which he varied from ranting about his legal troubles to offering retail investors trading advice, the 77-old onetime bond king reiterated his view that 10-year yields are likely to rise to 2% over the next 12 months, from the current level around 1.6%.
Even if bonds are likely to suffer losses, they still have a role to play in one’s portfolio given the economic uncertainties, he said.
“Markets have likely seen their secular, long term lows in interest rates, but expectations for a 30-year bear market to match the previous 30-year bull market are way overdone,” wrote Gross, who co-founded Pacific Investment Management Co. in the 1970s and retired in 2019.
“Bonds’ ‘days of wine and roses’ may be over,” but they “may do nicely while investors wait out uncertainties related to the U.S. budget, GDP growth in China, and run-ups in energy prices as we approach winter in the Northern hemisphere,” he said.