Tags: Pimco | Gross | Inflation | US | Debt | bonds | treasurys

Pimco’s Gross: Inflation to Make US Debt Unattractive

Wednesday, 18 May 2011 09:21 AM

The United States is headed for a period of slow growth mixed with high inflation rates, a nasty cocktail for U.S. bonds, says Bill Gross, co-head of Pimco, the world's largest bond fund.

"Debt tends to slow economic growth," Gross tells CNBC.

"We're going to have a slow-growth economy and probably one in which inflation goes higher, which is not a conducive recipe for financial markets."

Investors should look to countries like Canada, Brazil, Germany or other countries with "pristine balance sheets" for more attractive sovereign debt.

gross200.jpg
Bill Gross
(Pimco photo)
Don't count the U.S. out, Gross adds, just avoid Treasury debt for now.

"It's not that the United States is moving down the road towards decay or has too much debt that it can't be rectified," Gross says.

"The situation is really one in which Treasuries yield so little, and it's better to look for higher yielding opportunities."

Federal Reserve officials have said they are keeping an eye on inflation rates but are quick to point out that while prices at the gasoline pump and at the grocery store may be painful, overall, consumer prices are not threatening Fed comfort levels.

"The economy today faces many pitfalls, but I don't believe that runaway inflation is one of them," says John Williams, in his first speech as president of the San Francisco Fed, according to Reuters.

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The United States is headed for a period of slow growth mixed with high inflation rates, a nasty cocktail forU.S. bonds, says Bill Gross, co-head of Pimco, the world's largest bond fund. Debt tends to slow economic growth, Gross tells CNBC. We're going to have a...
Pimco,Gross,Inflation,US,Debt,bonds,treasurys,treasuries,Unattractive
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2011-21-18
Wednesday, 18 May 2011 09:21 AM
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