Buy stocks, sell bonds: How billionaire investor Bill Gross says investors should play an unpredictable market
Bond King Bill Gross says he's not very bullish on Treasurys.
Gross is more optimistic about stocks, eyeing a "little bull market."
He thinks the 10-year Treasury yield will struggle to fall much further from current levels.
The "Bond King" shared his take on both markets this week in a post on X, predicting a "little bull market" for stocks and a "little bear market" for bonds.
In his view, the 10-year Treasury yield isn't likely to dip below 4.25% soon, highlighting inflationary trends and deficit concerns. The yield on Tuesday was up slightly by about one basis point to 4.31%.
Gross sees more strength in the equity markets and maintains that stocks are likely to continue rising. He cites support from the tech sector, specifically artificial intelligence companies, as a likely growth driver.
Tech stocks are enjoying continued momentum, with the Nasdaq 100 index closing at a record high on Tuesday as markets cheered the Israel-Iran ceasfire.
Major chip companies with high AI exposure, such as Nvidia, Advanced Micro Devices, and Broadcom, have all trended upward despite the high uncertainty generated by geopolitics in recent weeks.
Gross's thesis is for AI to support economic growth of 1%-2%.
https://twitter.com/real_bill_gross/status/1937533874667684118
Regarding bonds, he said "deficits/ensuing supply of bonds/and a weak dollar should keep CPI from falling below 2.5% and the 10 year from falling below 4.25%."
As Treasurys are a lending benchmark for many consumer products, Gross's predictions for yields to remain elevated could complicate plans for everyday Americans. If yields remain stubbornly high, homebuyers looking for lower mortgage rates could be disappointed.
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'The average equity investor underperforms by 3.5% every year. They would have doubled their returns if they had something that kept them invested.' That makes sense to clients concerned about the heightened volatility roiling markets. 'This is when pricing can be extremely attractive,' Chang said. 'We are always one tweet away from a 10% move up or down. That's going to persist for a bit. ... When Henry Ford created the seat belt, less than 10% of consumers paid for that option. But if you're going to be out there in a Lamborghini, you want to put a seat belt on.' Sign in to access your portfolio
