Bill Gross says the Fed will keep short-term rates low for years to come. But, could a QE taper mean a steepening yield curve and thus higher long-term rates?
Bondholders may be having a tough fall and winter as the US Treasury 10-Year bond's prices fall, but Pimco’s Bill Gross isn't too stressed. Well, not when it comes to short-term bonds, at least.
The co-founder of the world's largest bond fund thinks the Federal Reserve Bank will keep short-term rates low well into 2016, if not beyond.
Gross needs to be right, if just for the sake of his fund. Pimco's Total Return fund has had seven straight months of outflows with a total of nearly $37 billion leaving the fund in 2013. November's outflows of $3.7 billion now leave the fund at $244 billion assets under management.
In his most recent note to investors, Gross says:
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“Our primary thrust has been to focus on what we are most (although not totally) confident about, that the Fed will hold policy rates stable until 2016 or beyond. While