Gross Recommends TIPS as U.S. Yields Lag Behind Inflation

Bill Gross recommended Treasury Inflation Protected Securities as U.S. five-year yields lagged behind the inflation rate by the most in six months.

Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said investors should avoid longer-term Treasuries because policies to spur growth will boost costs in the economy. Five-year notes yielded 0.62 percent, versus 2.2 percent inflation, based on consumer prices. The so-called real yield was negative 1.58 percent, the least since May.