Pimco is favoring Treasuries due in five, six and seven years because of the Federal Reserve's pledge to keep short-term rates low, Gross said Feb. 3 in an interview with Tom Keene and Ken Prewitt on the "Bloomberg Surveillance" radio program.
Inflation Outlook
The Fed is "not really afraid of higher inflation," making 10- and 30-year Treasuries unattractive, he said.
Central bank policy makers signaled in their Jan. 25 policy statement that they will keep the benchmark interest rate at virtually zero until at least late 2014, and Chairman Ben S. Bernanke said he's considering buying bonds to sustain the expansion. Bernanke told U.S. lawmakers on Feb. 2 that he's not seeking faster inflation as he tries to create jobs.
The Total Return Fund has about 8 percent of its holdings in Treasury Inflation Protected Securities in an "inflation bet," Gross said in the Feb. 3 interview.
Investors who seek the safety of Treasury bonds will have minimal returns as the Fed holds down interest rates, New York- based Fink said in a Feb. 8 interview with Susan Li on Bloomberg Television's "First Up."
Europe's struggle to contain a sovereign-debt crisis has driven investor demand for refuge assets, making U.S. Treasuries must-have securities in the past year.
They returned 10 percent in the 12 months to yesterday, and TIPS handed investors a 17 percent gain, according to Bank of America Merrill Lynch indexes. A gauge of bonds around the world returned 7.6 percent, the data show.
The MSCI All Country World Index of stocks fell 1.7 percent in the period after accounting for reinvested dividends, according to data compiled by Bloomberg.
The difference between yields on 10-year notes and TIPS, a gauge of trader expectations for consumer prices over the life of the debt, was 2.20 percentage points. The average over the past decade is 2.14 percentage points.