Original 'Bond King' Bill Gross: "US Treasury Bonds Overvalued"

"Inflation-Linked Bonds 1.80%
Better Returns Choice"

Bill Gross, the former 'Bond King' of Wall Street, stated that U.S. Treasury bonds are currently overvalued and announced that he would step away from investing in them.

On the 8th (local time), Bloomberg reported that Bill Gross made this statement through his X (formerly Twitter) account.

Gross said, "The U.S. 10-year Treasury bond is overvalued," adding, "If I had to buy bonds, I would rather choose inflation-linked bonds yielding 1.80%." He also added, "I would not buy bonds."

Gross earned the nickname 'Bond King' by growing Pacific Investment Management Company (PIMCO), which he co-founded with colleagues in the early 1970s, into the world's largest bond management firm. While Jeffrey Gundlach is considered the new 'Bond King' of Wall Street, Gross is regarded as the 'original.' At his peak, the investment funds he managed exceeded $290 billion (approximately 381 trillion KRW). Currently, he is with Janus Capital, and at the end of last year, he made millions of dollars by betting that the Federal Reserve (Fed) would shift its policy stance toward cutting interest rates in 2024.

The global bond market declined at the start of 2024 amid concerns that the market had risen too quickly at the end of last year but rebounded again on the 8th. The yield on the U.S. 10-year Treasury bond, which serves as a benchmark for global bond yields, surged by 17 basis points (1 bp = 0.01 percentage points) last week. This was the largest increase since October last year. The rise was influenced by better-than-expected U.S. employment data, leading investors to bet that the Fed would quickly cut interest rates.

Furthermore, Gross said, "We need to wait for the 2-year and 10-year Treasury yield curve to return to a positive state," adding, "We will earn returns while waiting." Currently, the 10-year Treasury yield is about 35 basis points lower than the 2-year Treasury yield. Since the yield curve inverted in July 2022, some have interpreted this as a signal of an impending recession. Investors have maintained the expectation that the two curves would invert over the past year.

Meanwhile, Gross also stated in October last year that he did not consider stocks and bonds attractive investment options. At that time, he advised that merger and acquisition (M&A) arbitrage was the best investment.

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