‘Bond King’ Bill Gross Calls 10-Year US Treasury ‘Overvalued’: ‘If You Need To Buy Bonds. I Don’t’

Bill Gross, a renowned investor and “bond king,” has warned about the overvaluation of 10-year U.S. Treasury debt and suggested a potential alternative.

What Happened: Gross, the co-founder of Pacific Investment Management Co., recently shared his views on the state of the U.S. bond market, as reported by Bloomberg. He believes that the 10-year U.S. Treasury is currently overvalued and that there is a better alternative in the form of Treasury Inflation-Protected Securities (TIPS) with a yield of 1.80%.

In a post on X on Tuesday, he expressed his opinion, arguing that TIPS is a more suitable option for investing in bonds. Gross recently gained from a considerable bet on a shift in the Federal Reserve’s interest-rate policy, suggesting that shorter-end notes might be a better option for potential investors.

See Also: US Economy Set For ‘Soft Landing’ As Economists Eye Fed Rate Cuts

The bond market experienced a rebound on Monday, following a decline at the start of 2024. This was largely driven by concerns that the late 2023 rally had progressed too rapidly. A robust labor-market data halted the rally, which led to a significant increase in benchmark US 10-year yields.

Why It Matters: Gross, also known as the “bond king,” has a history of making successful calls in the bond market. He made significant profits from a November rally in the U.S. Treasury market despite the market being at or near 16-year highs.

Earlier in 2023, Gross also expressed his belief in the long-term value of regional banks, describing the stocks as a “falling knife” that had not yet hit the ground. His continued success in the market and his recent warning about the 10-year Treasury’s overvaluation may serve as a significant indicator for potential investors.

Image via Shutterstock

Read Next: Bitcoin ETF Approval, ‘Dogecoin Killer’ Shiba Inu’s Surging Burn Rate And More: Weekly Crypto Round-Up

Engineered by
Benzinga Neuro, Edited by

Pooja Rajkumari

The GPT-4-based Benzinga Neuro content generation system exploits the
extensive Benzinga Ecosystem, including native data, APIs, and more to
create comprehensive and timely stories for you.
Learn more.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button