Bill Gross is warning investors that as Federal Reserve buyback programs disappear, bonds are likely to correct.
While we’re sure he remains a long-term bond bull (he sort of has to be, given his job), investors should give particular weight to his warning given his strong disincentive to be bearish.
Reuters: “It’s obvious that the programs in the United States, the Federal Reserve buyback programs … those purchases and that purchasing power will cease within the next three to four months,” Gross told a Canadian business television channel.
“So, to the extent that that’s gone, then perhaps the upward influence in terms of those longer-term Treasuries will be felt more strongly in the next several quarters.”
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