'Bond King' Bill Gross Nets Millions On Treasury Market Rebound

“Bond King” Bill Gross may have netted millions of dollars backing the November rally in the U.S. Treasury market.

Gross earned his “bond king” moniker while at Pacific Investment Management (PIMCO), a company he co-founded and where he managed the $270 billion Total Return Fund.

Now, as a private investor, Gross no longer controls the world’s biggest bond fund, but he still knows his way around the market. In October — while Treasury yields were at, or close to, 16-year highs — Gross predicted a turnaround in the market and placed his bets.

Also Read: November Rally Sets Treasury Bonds On Track For Best Month In 40 Years

Higher For Longer, No More

In October, Gross announced on X that he was buying Secured Overnight Financing Rate (SOFR) futures. He confirmed later, through a spokesman, that he’d purchased 3,000 SOFR three-month March 2025 contracts.

Maybe next week. Will tweet.
On bonds. Invest in the curve. Various combinations 2/10, 2/5. Should go positive before year end. I'm buying SFR h5 (SOFR futures). "Higher for longer" is yesterday's mantra. 2/2

— Bill Gross (@real_bill_gross) October 23, 2023

The position may have already netted him $4 million, according to a Bloomberg report.

This is a rather obscure area of the financial markets, and few without the many years of experience and knowledge as Gross would think of investing there.

But Gross was backing rising expectations that the Federal Reserve had finished its rate hike cycle and that bond yields would start to fall.

Referencing the Fed’s rhetoric throughout its period of interest rate increases, Gross said in his October 24 Tweet: “‘Higher for longer’ is yesterday's mantra.”

The iShares $ Floating Rate Bond UCITS ETF FLOT, an exchange-traded fund that tracks securities that reference the SOFR, gained 0.4% during November.

The day before he announced it on X, the yield on the 10-year Treasury peaked at 5.02%. It was the highest level since 2007. It has since fallen back to 4.2% pushing the price of the bond higher.

The Fed had already held its main rate steady at its September meeting at 5.25%-5.5% having last raised it at the July meeting. Gross was betting on the July move being the last. Indeed, the Fed held again at its November meeting and is now widely expected to begin cutting in the first quarter of 2024.

Now Read: Foreign Buyers Desert US Treasury Bond Market As Supply Increases