Bill Gross Warns on Increasing Instability of Global Economy

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.

via Reuters

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