'Original Bond King' Bill Gross Bets on Inflation, "Selling US Treasury Bonds"

Bill Gross [Photo by AP News]

[Asia Economy Reporter Byunghee Park] The 'original bond king' Bill Gross predicted in an interview with Bloomberg TV on the 16th (local time) that the U.S. consumer price inflation rate will rise to around 3-4% within a few months. He said that due to the expected inflation, he has been selling U.S. Treasury bonds for several weeks already.

According to Bloomberg News, Gross stated that the inflationary pressure is significantly increasing due to the massive fiscal stimulus law.

President Joe Biden signed the $1.9 trillion stimulus bill on the 12th and is pushing forward an infrastructure bill as part of additional stimulus measures.

Gross diagnosed that the stimulus bill was approved while U.S. household incomes are already substantial, resulting in an enormous potential demand. He said, "When American consumers are able to go anywhere, this potential demand will be unleashed, leading to a 3-4% consumer price inflation rate." Regarding the timing of the 3-4% inflation rate, Gross said, "It could be in 3 months, 6 months, or a year," adding, "If that happens, the U.S. central bank, the Federal Reserve (Fed), will have to halt its current stimulus policies."

The Fed began its two-day Federal Open Market Committee (FOMC) meeting on the same day. After the Fed concludes the policy meeting on the 17th, there is speculation that it may introduce an 'Operation Twist' policy, which maintains the scale of bond purchases while buying long-term Treasury bonds and selling short-term Treasury bonds to lower long-term bond yields. Gross also anticipated the possibility of introducing Operation Twist. He pointed to the recent pattern of Treasury yields rising to around 1.6% and then falling repeatedly, suggesting that the Fed may have already started purchasing long-term Treasury bonds.

Gross co-founded the investment firm PIMCO in 1971 and grew PIMCO's flagship Total Return Fund into the world's largest bond fund, earning him the nickname 'Bond King.'

On the same day, Greg Jensen, Co-Chief Investment Officer (CIO) of Bridgewater Associates, the world's largest hedge fund, said, "We are on the verge of a global chain reaction of inflation," and added, "The Fed may have to raise interest rates earlier than planned." Jensen also said, "Large-scale fiscal stimulus will significantly fuel inflation, which will threaten financial markets."

This content was produced with the assistance of AI translation services.