Pimco’s Bill Gross, manager of the world’s largest bond fund, said on Thursday the global economy has become difficult to stabilize and that investors should seek safety in shorter-dated bonds and inflation-protected Treasuries.
In his September letter to investors, Gross said central banks’ easy money policies have become less effective in generating economic stability, and that zero-bound interest rates have threatened finance and investment in the “real economy.”
“Why invest in financial or real assets if bond prices could only go down, and/or stock prices could no longer be pumped up via the artificial steroids of QE?,” Gross said, in reference to stimulative policies like the Federal Reserve’s $85 billion in monthly purchases of Treasuries and mortgage-backed securities.
Gross added that liquidity will be “challenged” when policymakers start to tighten easy money policies and stocks may also be “at risk” when the Fed ends its bond-buying program.
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