‘Not Buying’
Buffett said he isn’t investing in corporate debt, including Apple’s record offering, because yields are too low.
“We’re not buying corporate bonds of any kind now,” Buffett, 82, said May 4 during an interview with Bloomberg TV’s Betty Liu in Omaha, where Berkshire held its annual meeting. “Not at those yields.”
Gross, known as “The Bond King” in media outlets and named fixed-income manager of the decade in January 2010 by Morningstar Inc., said May 10 that returns will probably be in the range of 2 percent to 3 percent.
Markets are entering “a 12-month period of time ahead in which, combined, Treasury, corporate and high yields don’t move much,” Gross, the co-founder and co-chief investment officer of Pimco, said in a May 16 Bloomberg Television interview with Erik Schatzker and Sara Eisen.
“Given this juncture where we are, there are a lot of different opinions and the range is pretty wide,” Dorian Garay, a New York-based money manager for an investment-grade debt fund at ING Investment Management, said in a telephone interview. “Uncertainty is pretty high.”
Benchmark Maintained
The Federal Open Market Committee said May 1 it will keep up its monthly purchases of mortgage bonds and $45 billion in Treasuries, and is ready to increase or reduce the pace in response to changes in the outlook for inflation and the labor market.
Dallas Federal Reserve Bank President Richard Fisher said May 16 that buying mortgage bonds risks disrupting the market, while Philadelphia Fed President Charles Plosser said, “it’s not good for the bank to be holding lots of mortgage paper.” Jeffrey Lacker of Richmond said to reporters a day earlier that the Fed should “get out of the credit allocation business.”
Policy makers also are maintaining benchmark interest rates, kept in a range between zero and 0.25 percent since December 2008, at record lows as long as the outlook for inflation doesn’t exceed 2.5 percent and unemployment remains above 6.5 percent.