Bill Gross’s shift into longer-dated bonds is looking good so far, with the yield on 10-year treasuries falling back to May levels. It appears he doesn’t fear inflation whatsover. You can’t if you’re betting long-term at recent ~3.2 – 3.7% treasury yields.
Yet such 10-year investments will turn out horrendous if in reality inflation is as bad as someone like Jim Rogers says it is, or if we’re about to experience a period of high inflation as a long list of bearish commentators warn.
Thus Mr. Gross has prominently positioned himself directly opposite the commodities/inflation camp. Yet don’t forget that he is bearish at the same time. We’d pay to get him in the same room with any of them.
Joe Kernen: “You bet on deflation in the face of the biggest Fed action and government fiscal spending in history and you’re still going to be right on these bonds.”
Bill Gross: “Well it’s not exactly a bet on deflation, but it’s certainly a bet on inflation moving down closer to zero.”
Joe Kernen: “And you did it as Gold was surging through $1,000 and all the other commodities were going, and the stock market was going, and we asked ourselves who should we listen to?”