Reply #11: Bond guru Gross turns bearish [View All]

[ozymandius]

NEW YORK (CNNMoney.com) -- Legendary bond investor Bill Gross expects strong economic growth worldwide to push up global interest rates and put a damper on the Treasury market.

A long time bond market bull, the PIMCO manager says he's now a "bear market manager" and has raised his forecast range for the benchmark 10-year U.S. yield to 4 percent to 6.5 percent. That's up from last year's forecast range of 4 percent to 5.5 percent.

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Years of strong growth in low-cost countries have helped keep inflation contained, but inflation should drift higher as the labor forces of Asia and other emerging markets are incorporated into the global economy, Gross said.

Besides inflation rising slightly higher, the bond market faces other pressures. Central banks and asset managers are likely to shift away from safe-haven investments, such as U.S. Treasurys, as they seek out higher yields, Gross said.

http://money.cnn.com/2007/06/07/markets/bondcenter/gross/index.htm?postversion=2007060721