Gross Says Treasury Yields Too Low as Fed Approaches QE2 End

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing.

Treasury yields are about 150 basis points too low when viewed on a historical context and when compared with expected nominal gross domestic product growth of 5 percent, Gross wrote in a monthly investment outlook posted today on the Newport Beach, California-based company’s website. The Fed is scheduled to complete purchases of $600 billion of Treasuries in June.