Bill Gross Predicts Little Bull Market for Stocks and Bear Market for Bonds: Key Factors to Watch

Investing.com -- Billionaire investor Bill Gross shared his market outlook on Tuesday through a post on social media platform X, offering predictions for both stock and bond markets. Gross noted that historical research shows the U.S. 10-year Treasury has typically traded at the Consumer Price Index (CPI) plus 175 basis points. With inflation currently at 2.5%, this formula would put the 10-year Treasury yield at approximately 4.25%. The investor, known as the "Bond King," explained that while this relationship reflects historical patterns, current economic factors could maintain this level going forward. He specifically cited budget deficits, the resulting supply of bonds, and a weak dollar as factors likely to keep inflation from dropping below 2.5% and the 10-year Treasury yield from falling below 4.25%. Regarding equities, Gross observed that stocks are currently dominated by artificial intelligence themes and continue to suggest economic growth of 1-2%, despite challenges from tariffs and geopolitical tensions. "I suggest a 'little bull market' for stocks and a 'little bear market' for bonds. Nothing dramatic either way for now," Gross stated in his social media post.

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