Gross says Treasury yield at 2.6% more important than Dow at 20,000

Gross says Treasury yield at 2.6% more important than Dow at 20,000
Former bond king doubts Trump-led economy will register a long-term growth rate above 2%. (More: <a href=&quot;http://www.investmentnews.com/article/20161215/FREE/161219961/charts-say-bond-bull-market-has-gasped-its-last-breath&quot; target=&#8221;blank&quot;>Charts say bond bull market has gasped its last breath</a> )
JAN 25, 2017
By  Bloomberg
Investors should watch for 10-year Treasuries to move above 2.6% a threshold that would mark an end to the three-decade bond bull market and be a more important barometer than the Dow Jones Industrial Average passing 20,000, according to billionaire bond manager Bill Gross. “It is the key to interest rate levels and perhaps stock price levels in 2017,” Mr. Gross, manager of the $1.8 billion Janus Global Unconstrained Bond Fund, wrote in a monthly investment outlook released Tuesday. “Investment happiness and/or despair may lie ahead over the next 12 months depending on it.” (More: Charts say bond bull market has gasped its last breath ) Stocks have rallied on hopes that the surprise victory of President-elect Donald Trump will lift U.S. gross domestic product growth to 3% from the past decade's 2% average, according to Mr. Gross. But the slower pace, popularized as “the new normal” by Pacific Investment Management Co. after the 2008 financial crisis, while Gross was the firm's chief investment officer, will be challenging to exceed because of an aging population, technological advancement and the retreat of globalization, he wrote today. “President-elect Trump tweets and markets listen for now,” Mr. Gross wrote. “Trump's policies may grant a temporary acceleration over the next few years, but a 2% longer term standard is likely in place that will stunt corporate profit growth and slow down risk asset appreciation.” The Dow Jones industrials ended Monday at 19,887 after gaining 8.5% since the Nov. 8 election. Yields on 10-year Treasuries, which surged to a high of 2.5967 percent on Dec. 15, retreated to 2.3647 percent as of Monday. (More: Pimco's Dan Ivascyn not as flamboyant as the old bond king, but he has produced results ) The Janus unconstrained fund returned 5.3% last year, outperforming 56% of its Bloomberg peers. It has returned about 4.5% since Gross took over after leaving Pimco in September 2014.

Latest News

'Bogged down' advisors just want to have fun (again)
'Bogged down' advisors just want to have fun (again)

Jim Cahn, of Wealth Enhancement Group, lifts the lid on his firm's partnership model, his views on RIA M&A, and the widely slept-on reason why advisors are merging into larger organizations.

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.