Bond King Bill Gross warns 'don’t own bonds' as long-term debt enters a new ear of volatility

Key Points:

• Bill Gross warns that the current $84 trillion in government, mortgage, and corporate debt is dangerously unbalanced, risking future economic growth despite fueling inflation and growth now.
• He advises avoiding bonds except for one-year Treasury bills at 4.55%, and cautions about stocks at record highs due to expected profit margin contractions from rising yields and increased market volatility.
• The bond market has become more volatile with hedge funds now holding 8.5% of Treasury securities, surpassing traditional institutional investors, which may undermine bonds' role as a safe-haven asset during market stress.
• Gross expresses skepticism about AI sector stocks with high valuations and warns that income funds could be vulnerable if short-term interest rates rise further.
• His current investment approach is to "preserve and protect," reflecting caution amid shifting market dynamics and elevated risks.