Tags: Gross | bull | bonds | over

Pimco’s Gross: 30-Year Bull Market for Bonds ‘Probably Over’

By Dan Weil   |   Monday, 19 Mar 2012 07:44 AM

The three-decade bull market for bonds is nearly over, says bond market legend Bill Gross, co-chief investment officer of Pimco.

“We have been close [to the end] for a number of months,” he tells Yahoo.

Long-term U.S. bond yields across different categories are a little higher than 2 percent. So unless the United States turns into Japan, where yields have dropped to 1 percent, U.S. yields are close to a bottom, Gross says.

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“It doesn’t mean the beginning of a bear market, but it does suggest at least that the great bond bull mark since 1981 is probably over.”

To be sure, Gross, who manages the world’s biggest bond fund, Pimco Total Return, is still buying Treasurys. They account for 15 percent to 20 percent of the portfolio, he says.

The alternatives aren’t attractive in Gross’ eyes. Dividend stocks may provide juicy yields, but there’s substantial risk of capital loss.

The price risk isn’t great for Treasurys, and most of it is at the long end of the yield curve, Gross says. So he recommends that investors “center your concentration at five to seven years.”

Many Treasurys traders have turned bearish after the biggest weekly price drop in eight months.

“The data is strong enough not to warrant further assistance” from the Federal Reserve, Sean Murphy, a trader for Societe General, tells Bloomberg. “I don’t think the backdrop is particularly supportive for Treasurys.”

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