(Bloomberg)  Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., said the larger-than-forecast gain in March employment suggests the Federal Reserve's policy of quantitative easing is working.

Whether the gains in employment generated through government stimulus are sustainable is still in question once the Fed stops buying Treasuries, Gross said in a radio interview on "Bloomberg Surveillance" with Tom Keene. The central bank has completed almost two-thirds of its plan to buy $600 billion in bonds to spur growth and keep borrowing costs low to keep the recovery from faltering.

"This is a good jobs report and the private sector obviously is benefitting as is the average American," Gross said. "There are a still lot of structural holes that will take a long, long time to fill."

Payrolls increased by 216,000 workers last month after a revised 194,000 gain the prior month, the Labor Department said today in Washington. Economists projected a March gain of 190,000, according to the median estimate in a Bloomberg News survey. The jobless rate dropped from 8.9 percent in February, the fourth straight decrease.

"Their objective obviously is to improve the economy and to create jobs, but also to put a floor under the stock market, and we know that's working," Gross said. "The question remains, when the Fed stops buying Treasuries, does the private sector take the baton and run the last leg of the relay race?"

Rate Speculation

The economy needs to produce jobs at a similar level for another three to four months before the Fed can consider raising interest rates, according to Gross.

"Bernanke's original statement three or four months ago -- was that he would raise rates when there was proof of a sustainable path of economic growth," said Gross. "We suspect that means employment growth. We have to get another three of four months of this before we can look forward to a hike at some point."

Yields on two-year Treasury notes rose to a 10-month high after the employment report added to speculation the Fed is moving closer to ending stimulus measures such as the Treasury purchases or raising its target rate for overnight loans for banks. Policy makers have keep the rate at a record low range of zero to 0.25 percent since December 2008.

Philadelphia Fed President Charles Plosser said in Harrisburg, Pennsylvania, today that the economy may improve quickly enough that the central bank would need to raise borrowing costs before year-end. St. Louis Fed President James Bullard said this week the central bank may need to curtail bond purchases.

'Doves Cry'

"We need to wait for the day and this weekend and when the doves cry, so to speak--the Prince song," Gross said. "The three doves being Dudley, Yellen and of course Ben Bernanke. When they speak, we'll listen a little bit harder."

New York Fed President William Dudley said today in San Juan, Puerto Rico, that the economy's recovery is "still tenuous" and is "still far from the mark" of the central bank's goals of price stability and full employment.

The two-year note yield touched 0.89 percent, the highest level since May 2010, and was headed for a weekly increase of 15 basis points. The benchmark 10-year note yield was up three basis points to 3.50 percent and was poised for a weekly advance of six basis points.

Gross wrote in a commentary this week that Treasuries "have little value" because of the growing U.S. debt burden. Gross eliminated government-related debt from his $237 billion Total Return Fund, the world's largest mutual fund, last month for the first time since January 2009.

Total Return Fund

The U.S. has unrecorded debt of $75 trillion, or close to 500 percent of gross domestic product, counting what it owes on its bonds plus obligations for Social Security, Medicare and Medicaid, Gross wrote in his monthly investment outlook.

The U.S. will experience inflation, currency devaluation and low-to- negative interest rates after accounting for consumer-price gains if it doesn't reform its entitlement programs, he wrote.

The Total Return Fund has returned 6.9 percent in the past year, beating 82 percent of its peers, according to data compiled by Bloomberg. It gained 0.28 percent over the past month.

Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.24 trillion of assets as of December.