Fed policy makers, who meet this week, will likely keep their target interest rate for overnight loans between banks in a record low range of zero to 0.25% through year-end, according to the median estimate of more than 75 economists surveyed by Bloomberg. A separate poll show the economists reduced their 2011 growth estimates to 2.9% from 3.2% in February.

Ten-year yields fell almost two basis points, or 0.02 percentage point, last week, according to Bloomberg Bond Trader prices. The 3.625% security due February 2021 rose 3/32, or 94 cents per $1,000 face amount, to 101 28/32.

The yield fell one basis point to 3.39% today at 7:43 a.m. in New York.

Competing Proposals

The split between Gross and the dealers comes as President Barack Obama and Republicans in Congress debate competing proposals to reduce the $1.4 trillion budget deficit.

Obama has proposed $4 trillion in spending cuts within 12 years through a combination of reduced expenditures and tax increases. The Republican-controlled House passed a budget April 15 that would trim spending by more than $6 trillion over a decade and slash government support of Medicare and Medicaid.

With the supply of marketable Treasuries outstanding having more than doubled to $9.1 trillion since the start of the financial crisis in August 2007, the political moves are so far insufficient for Gross.

"This no Treasury thing is simply a demonstration of vigilance on the part of Pimco that says these bonds aren't worth what others appear to think they're worth, and we prefer another menu, that's all," Gross said.

Eliminated Treasuries

Gross eliminated Treasuries from his fund in February and then, in March, bet that the debt will lose value, according to the firm's holdings statement released April 11. The Total Return Fund has averaged an 8.65% gain the past five years, beating 99% of its peers, Bloomberg data show.