Gross: Short-Term Bonds 'Only Safe Haven' for Investors

Sunday, 03 Aug 2014 02:23 PM

By Dan Weil

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Global concerns that span a number of hot-button issues should help push investors to short-term bonds, says Pimco Chief Investment Officer Bill Gross.

"It appears the only safe haven is the front end of the U.S. yield curve, in which the market expects the Fed to stay on hold for longer," Gross told Yahoo.

He said recent movements in global markets suggest worries about “the potential for a global mini trade war between Russia and the rest of the world... Argentina in terms of a default... and a potential for bond investors in other countries to simply say, ‘Ya know, it’s not worth the risk.’”

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

As for Friday's U.S. employment statistics, wages rose only 2 percent in the 12 months through July.

Wages "are not raging," Gross told Bloomberg. And "American wages on Main Street are Janet Yellen’s number one concern."

So that will help keep the Fed from raising rates for a while, Gross said. Many economists expect the first increase to come in the second or third quarter next year. The central bank has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.

One Fed policymaker who thinks the central bank shouldn't wait too long is Dallas Fed President Richard Fisher. He told CNBC that a strengthening economy may lead the Fed to raise interest rates sooner than many analysts expect. "Sometime early next year, I do believe it's possible," Fisher said.

The economy expanded 4 percent in the second quarter, and many analysts expect growth of 3 percent or more for the rest of the year. "Things are moving in the right direction, and that's good for the real economy," he said.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

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