Bill Gross got it right when he recommended short-term Treasurys this week.

“Not braggin’ but what did we tell you,” Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., wrote on Twitter.

The difference between 5- and 30-year yields widened to 2.37 percentage points Thursday, the most in almost six months. Gross wrote on Twitter Sept. 15 that investors would demand more yield to own long bonds versus 5-year notes after Lawrence Summers quit the race to head the Federal Reserve. The former Treasury secretary’s move ended speculation he would undo the central bank’s policies aimed at holding down borrowing costs.

The Fed unexpectedly refrained from reducing its $85 billion pace of monthly bond buying Wednesday, saying it needs more evidence of lasting improvement in the economy. Futures contracts indicate investors are betting policy makers will wait longer before raising their target for overnight lending between banks, benefiting short-term Treasurys, those that are most sensitive what the central bank does with its benchmark.

Vice Chairman Janet Yellen, a supporter of Bernanke’s policies, is the top candidate to succeed him, according to people familiar with the process.

The decision by Summers to withdraw marks the beginning of the Yellen Fed, Gross said in his Twitter post. Traders will have a “frontend friendly” market for a long time, he wrote, referring to the shortest Treasury maturities.

Fund Performance

Gross’ $251.1 billion Total Return Fund has fallen 2.5 percent this year, underperforming about two-thirds of its peers, according to data compiled by Bloomberg. Over the past five years, it has gained an average of 7.5 percent annually, ranking in the 89th percentile.

Pimco, based in Newport Beach, California-based company is a unit of Munich-based insurer Allianz SE.

The central bank left unchanged its outlook that its target interest rate will remain near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent, according to a statement after its meeting concluded.

Unemployment was 7.3 percent in August, and the central bank’s preferred measure of cost increases in the economy was at 1.4 percent in July. The Fed has kept the target for its benchmark in a range of zero to 0.25 percent since 2008.

Fed Futures

Thirty-day federal funds futures contracts for delivery in May 2015 yielded 0.505 percent Wednesday, indicating investors expect the Fed target to be higher by then. Earlier this month, the contracts signaled investors were preparing for the first increase in January 2015.

A Bloomberg U.S. Treasury Bond Index measuring securities due in 1 to 5 years returned 0.5 percent this week and 0.4 percent for September as of Wednesday.

The Bloomberg index tracking U.S. government securities maturing in 10 years and longer gained 1.4 percent this week, leaving it with a monthly loss of 0.4 percent.

U.S. five-year yields fell four basis points, or 0.04 percentage point, to 1.39 percent as of 6:41 a.m. in London, based on Bloomberg Bond Trader data. Thirty-year yields increased two basis points to 3.77 percent.

While shorter-term notes tend to follow what the Fed does with its benchmark rate, longer-maturity bonds are more influenced by inflation prospects and the central bank’s debt purchases.

“They will continue easier monetary policies,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-largest publicly traded bank by market value, referring to Fed policy makers. “The risk of inflation pushes up longer-term yields.”