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Bill Gross Says Bond Market ‘No Disaster,’ Sees 10-Year Yield at 2%

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  • 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.
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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.

See: Bill Gross Found in Contempt of Court, Gets Suspended Jail Time

Gross said he continued to short meme stocks, including GameStop Corp. and AMC Entertainment Inc., “with the caution that volcanoes erupt every once in a while.”

He said his portfolio is “well stocked with natural gas pipeline partnerships,” which offer deferred tax payments on dividends that yield as much as 10%. For those who are “willing to take the plunge,” he recommended a natural gas pipeline exchange-traded fund — Alerian MLP ETF.

“No guarantees here – prices will fluctuate as they say – but then in this case you can only hang me once,” said Gross, who has been sentenced with community service after being found guilty of flouting a judge’s order not to annoy his neighbor.

The title of his latest note? “You Only Hang Twice.”

(Photographer: David Paul Morris/Bloomberg)

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