| NEW YORK, June 14
NEW YORK, June 14 Bill Gross, co-chief
investment officer of PIMCO and manager of the world's largest
mutual fund, said Friday the Federal Reserve is not likely to
raise interest rates anytime soon and that he sees
intermediate-term Treasuries as an attractive investment
"We don't see the Fed raising rates in a meaningful way for
at least the next few years," said Gross, also a founder of
Pacific Investment Management Co., in an article posted on the
In the article, entitled "Which Way for Bonds? Mapping a
Path Forward," Gross said the U.S. unemployment rate at 7.6
percent remains too high for the Fed to quickly end its easy
Gross is the latest big money manager to say markets have
overreacted to speculation that the Fed is going to stop pulling
back on its monthly purchases of $85 billion in U.S. Treasuries
and mortgage securities.
Gross, whose flagship PIMCO Total Return Fund has
roughly$285.2 billion in assets, said in the article on Friday
that he is reducing risk in the fund in response to economic
uncertainty and the negative effects of global stimulus measures
on economic growth. The PIMCO Total Return Fund is down 1.23
percent this year, according to the firm's website.
Gross said that intermediate-term Treasuries are currently
attractive at yields of around 2 percent. He decreased his
exposure to Treasury debt in his PIMCO Total Return Fund to 37
percent in May from 39 percent in April, however, according to
data on the company's website.
The benchmark 10-year Treasury yield was at 2.13 percent at
the close of trading on Friday. The yield has surged ever since
May 22, when Fed Chairman Ben Bernanke suggested during
testimony on Capitol Hill that the bond purchases could be
slowing or coming to an end in the near future.
Gross also said that PIMCO is avoiding bonds with longer
duration, reducing exposure to the debt of companies and sectors
that are vulnerable to economic risk, and increasing exposure to
stronger economies such as the U.S., Brazil, Mexico, and
The Newport Beach, California-based PIMCO, a unit of
European financial services company Allianz SE, had
$2.04 trillion in assets at the end of March.
Gross, who said last month that the 31-year bull market in
fixed income ended on April 29, said in the latest article that
the bond market is still not nearing a bear market.
"While we are not likely to see a repeat of that type of
bull market any time soon, we also do not believe we are at the
beginning of a bear market for bonds," Gross said.