China News Service, September 6 reported that the legendary former bond investor Bill Gross said that bonds are "junk" and that buying US government bonds now is a bet that almost certainly loses money.
Gross is the former "bond king" and turned Pacific Investment Management Company (PIMCO) into a US$2 trillion asset management company before leaving in 2014.
He published an article on investment prospects on his personal website, launching the latest blast on the asset class that made him famous.
U.S. Treasury yields have fallen sharply in recent months, catching many large investors by surprise.
On September 2, the yield on the 10-year U.S. Treasury bond, which is the benchmark for global financial assets, was only 1.29%, far below the peak level of 1.75% at the end of March.
Gross believes that given that the Fed is expected to soon begin to reduce its bond purchase program, at current levels, yields "have nowhere to go, only to rise."
Gross said that the yield on the 10-year U.S. Treasury in the next 12 months may rise to 2% from the current pair of around 1.3%, which is equivalent to a loss of about 3% for investors.
Gross said: "Cash has been rubbish for a long time, but now there are new competitors. Medium and long-term bond funds are also in this trash can."