Bill Gross Releases New Investment Outlook, 'Status Quo'

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Jul 21, 2023, 10:00 ET

LAGUNA BEACH, Calif., July 21, 2023 /PRNewswire/ -- Legendary bond and fixed income investor William H. (Bill) Gross today released a new Investment Outlook, "Status Quo". In his latest Outlook, Mr. Gross writes that with inflation back to around 3% and the Fed nearing the end of its tightening cycle, it would appear to many that a new bond bull market is about to begin. Mr. Gross doesn't agree: "While I think that the 10 year at 3.80% may have peaked at 4% for 2023, a bull market is not in the cards," he writes.

Mr. Gross cites three reasons for his skepticism of a bond bull market:

"Supply and the current Quantitative Tightening (QT) program by the Fed promise to keep yields above 3.5% for a long, long time. Medicare, Medicaid, and Boomer Social Security benefits will floor the 10 year near current levels.
"If Jay Powell's goal of 2% inflation is achieved, a 2.5% Fed Funds level (.5% real) historically has led to a +140 basis point spread for the 10 year over FF, what is commonly known as the "term premium". That suggests 3.9% for the 10 year at 2% inflation. The market at 3.75% is already there and then some. If 2% inflation cannot be achieved and sustained then 2024/2025 may see 4%+ yields.
"While the U.S. Treasury market may be the world's lead horse, it does not necessarily dictate if other bond markets will follow stride for stride. Germany's 10-year Bund has risen 300 basis points from its bottom, much like the U.S., but the ECB has more work to do than the Fed and may exert a gravitational upward pull in future months. Similarly, UK 10-year Gilts – and yes Japanese 10-year JGBs show little sign of bullishness."

Mr. Gross warns that as the market awaits a future Fed easing policy, "bondholders will experience a continuing bear market, with negative implications for stocks as well."

Full text of Bill Gross's July 21, 2023, Investment Outlook can be found at his website.

About Bill Gross

Bill Gross has been a pioneer in fixed income investing for more than 40 years. He co-founded PIMCO in 1971 and served as managing director and chief investment officer until joining Janus Henderson Investors in 2014. He retired in 2019 to focus on managing his personal assets and private charitable foundation. Throughout his career, he has received numerous awards, including Morningstar Fixed Income Manager of the Decade for 2000 to 2009 and Fixed Income Manager of the Year for 1998, 2000 and 2007. Mr. Gross became the first portfolio manager inducted into the Fixed Income Analysts Society's Hall of Fame in 1996 and received the Bond Market Association's Distinguished Service Award in 2000. In 2011, Institutional Investor magazine awarded him the Money Management Lifetime Achievement Award. Mr. Gross oversees the $450 million-asset William, Jeff and Jennifer Gross Family Foundation, which annually donates up to $21 million to non-profits involved in humanitarian causes, health care, and education. For more information or to view Investment Outlook archives, please visit https://williamhgross.com. For information about Mr. Gross's philanthropic activities through the William, Jeff and Jennifer Gross Family Foundation, please visit https://grossfamilyfoundation.com/. Order his book "I'm Still Standing: Bond King Bill Gross and the PIMCO Express" on Amazon.com.

SOURCE Bill Gross