Bill Gross has been speaking at a Bloomberg conference this afternoon offering his views on US government bonds and the broader economy. The fund manager believes that US bonds are a bargain relative to other countries with the current 2.16% yield on the ten year (Tnote) higher than many other developed countries. 

German yields over the same maturity for instance are a measly 0.255%, France 0.676% and the UK 1.544%. The yield on the Tnote is inversely related to price meaning higher prices equate to lower yields.  

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 The Tnote has been rising for much of the year as the market attempts to recoup the losses seen since the US election. Price has just crossed back above the 200 day SMA. Note a rise in the Tnote indicates a fall in US yields.

 Other comments from Gross include:

  • Halcyon days of investing are over
  • Credit cycle has largely played out
  • Volatility will continue to be low
  • In bonds market the future returns going to be very narrow
  • At some point the Fed crossed the line and went too low.