Bill Gross says Treasuries are in 'hibernating bear market'

Yields aren't likely to move substantially higher from current levels, bond guru says

May 3, 2018 @ 10:43 am

By Bloomberg News

If billionaire bond investor Bill Gross is right, most of this year's excitement in the Treasury market is behind us and yields won't see a substantial move from here.

The Janus Henderson fund manager doesn't see a blowout in yields to much above the 3% level, which the 10-year Treasury briefly pierced last week for the first time since 2014. However, the Federal Reserve's commitment to gradually tighten monetary policy, coupled with the U.S. government raising more cash by selling bonds, will continue to weigh on prices.

"Supply from the Treasury is a factor in addition to what the Fed might do in terms of a mild, bearish tone for U.S. Treasury bonds," Mr. Gross told Bloomberg TV. "I would expect the 10-year to basically meander around 2.80% to perhaps 3.10% or 3.15% for the balance of the year. It's a hibernating bear market, which means the bear is awake but not really growling."

(More: Bill Gross fares worst among go-anywhere bond managers as stocks slide)

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