[credit provider=”via PIMCO”]
We’ve been chronicling the steady failure of Bill Gross’ attempt to short Treasuries lately, using the dubious idea that the end of QE will shoot rates higher.Well, it sounds like he’s less and less enamoured with that on.e
Asked Friday Gross told Reuters: “Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations.”
So apparently America going broke is no longer a big concern to him.
In the end he’s right though: If the US economy weakens, bonds will rally. If it strengthens, they won’t. Whether QE is on or off doesn’t have much to do with it.