“Sometimes wrong, but always certain” is how Bill Gross, 69, describes his investment history. But he has been right often enough to be deemed “the undisputed king of the bond market”, says Dam McCrum in the FT. He runs the world’s largest fund, worth $293bn.
Now he reckons that the 30-year bull market in government bonds is over. The yield on ten-year US Treasuries has crept up of late (reflecting falling prices) and American mortgage rates have risen too. Investors have started to expect the US Federal Reserve to start winding down its money-printing and bond-buying.
But just because the bond bull is over, notes Gross, doesn’t mean that a bear market will immediately follow it. Bonds could well plateau. Don’t expect bond yields to rise significantly until growth gets going, says Gross. With the world economy still fragile, that could still be two years away. He thinks bonds are still one of the least-worst assets to own in a world full of bubbles. As someone with enough discipline to wake before dawn each day without an alarm clock, says McCrum, Gross won’t retire before he has proved himself against a bear market.