Bill Gross Says Bond Investors Shouldn't Expect to Earn Money This Year

The transcript discusses the current state of credit stress in high yield and investment grade markets, noting tight spreads despite rising treasury yields. It highlights the challenges high yield companies face with narrowing spreads and higher yields, predicting further widening. The conversation shifts to retail investors' sensitivity to bond price declines and the potential for panic. The discussion concludes with a focus on unconstrained investment strategies, emphasizing the flexibility to adapt to market conditions by adjusting duration.

What is the main reason for the widening of spreads in high yield markets?

• Treasury yields are decreasing.

• Investment grade companies are defaulting on their bonds.

• High yield companies are facing narrowing spreads and higher yields.

• High yield companies are issuing longer-term bonds.

What might cause retail investors to panic in the bond market?

• High inflation rates.

• Increasing bond prices.

• Stable interest rates.

• Declining bond prices and negative returns.

What is the expected return for bond investors in 2018 according to the discussion?

• High returns due to stable bond prices.

• Moderate returns due to low inflation.

• Zero or negative returns.

• Positive returns due to high yields.

What is a key advantage of unconstrained funds in a bear market?

• They guarantee positive returns.

• They are tied to the Barclays Aggregate Index.

• They focus on long-term bonds.

• They offer flexibility to adjust duration.

How do unconstrained funds differ from typical total return funds?

• They are restricted by the Barclays Aggregate Index.

• They have a fixed duration of five years.

• They can adjust duration to negative values.

• They only invest in high yield bonds.