Bill Gross warns, too much risk, too low yields in bonds
In his June outlook, Mr. Gross notes that, “Soaring Debt/GDP ratios in previously sacrosanct AAA countries have made low cost funding increasingly a function of central banks as opposed to private market investors.
Both the lower quality and lower yields of such previously sacrosanct debt represent a potential breaking point in our now 40-yr old global monetary system.”
The PIMCO High Income Fund (NYSE:PHK) has over $1.5-B in assets and PIMCO Total Return ETF (AMEX: BOND) reportedly hit $1-Bin assets last week after having been traded since March of this year.
Mr. Gross also believes now that fixed income investors should favor quality and what he calls “clean dirty shirt” sovereigns such as the United States, Mexico and Brazil. He also emphasized intermediate maturities that gradually shorten over the next few years.
The Key takeaway from the report: “The global monetary system which has evolved and morphed over the past century but always in the direction of easier, cheaper and more abundant credit, may have reached a point at which it can no longer operate efficiently and equitably to promote economic growth and the fair distribution of its benefits.”
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Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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