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Bond King Warns: Ditch Bonds Now!
6 Oct
Summary
- Bill Gross advises investors against holding most bonds.
- Excessive government and private debt is a primary concern.
- Short-term Treasury bills are Gross's sole exception.
Legendary investor Bill Gross has issued a strong caution to bondholders, advising them to divest from most fixed-income securities. Gross, co-founder of Pacific Investment Management Company (PIMCO), highlights the massive accumulation of U.S. government and private debt, now totaling approximately $84 trillion, as a significant destabilizing factor. He points out that U.S. government debt has reached a concerning peacetime high of 100% of GDP. While such borrowing can stimulate the economy short-term, Gross argues it contributes to inflation and economic slowdown.
However, Gross's pessimistic outlook on bonds is not absolute. He identifies short-term Treasury bills, particularly one-year T-bills yielding 4.55% as of September 30, 2026, as the only segment of the bond market he currently endorses. His primary reservation regarding longer-term bonds stems from inadequate investor compensation for duration risk. Despite yields on the benchmark 10-year Treasury exceeding 5% in late September 2026, he asserts the potential downside risk outweighs the offered returns. Market indicators, such as bond vigilantes demanding higher yields, suggest these concerns are already impacting the market.
