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Bill Gross on Bond Investing Today

April 17, 2011

Morningstar’s Eric Jacobson interviewed PIMCO’s Bill Gross on the macroeconomic picture, interest-rate risk and his investment outlook today.

Massive purchases of U.S. debt by the Fed and foreign governments has suppressed yields, pushing the risk/reward trade-off out of balance, says PIMCO's Bill Gross.

PIMCO Manager Bill Gross says it is unthinkable that the United States would default on its obligations but that right now debt from nations such as Canada, Brazil and Germany offer better yields and less risk.

PIMCO's Bill Gross thinks that simply buying longer-duration Treasuries is no longer a viable strategy and that bond investors need to broaden their horizons to achieve a decent total return.

Investors' demand for yield makes it impractical for bond funds to eliminate all duration risk, says PIMCO's Bill Gross.

Although PIMCO does expect inflation of 2%-3% going forward, higher yields should help bond investors mitigate the pain of falling prices.

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