Bill Gross, the co-founder of PIMCO, also known as "Bond King", has expressed concerns about the potential impact of a Donald Trump re-election on the bond markets.
What Happened: Gross suggested that a Trump victory in the upcoming presidential election would be “more bearish” and “disruptive” for the bond markets than a win by the incumbent, Joe Biden, Gross said this in a recent interview with the Financial Times.
Gross, who is famous for his bond investments, pointed out that Trump’s proposed tax cuts could worsen the already rising U.S. deficits.
He stated, “Trump is the more bearish of the candidates simply because his [programs] advocate continued tax cuts and more expensive things. Trump’s election would be more disruptive.”
These comments come at a crucial time, with the U.S. presidential election just months away. Despite Trump’s lead in national opinion polls and key swing states, Gross’s remarks challenge Trump’s claims of being a better economic steward than Biden.
Gross’s concerns are rooted in the growing U.S. deficits, which have led him to move away from the bond strategy that made him famous. He also expressed skepticism about the US equity markets, advising investors to “temper their expectations.”
Why It Matters: Gross’s warning about the potential impact of a Trump re-election on the bond markets comes in the wake of his previous comments on the U.S. economy. Earlier in the year, he warned that the $34 trillion debt deficit could fuel inflation, likening it to a “significant problem” like global warming over the next decade. His recent remarks add to the growing concerns about the economic implications of the upcoming election.
Despite these concerns, the stock market has been performing well, hitting milestones under Biden’s presidency. This raises questions about the potential impact of the election on the markets, especially in light of Gross’s warnings.
Meanwhile, Gross has been making strategic moves in the market, including betting against Trump’s newly-listed Trump Media & Technology DJT and shifting his fixed-income allocation to a closed-end fund. His recent comments provide valuable insights for investors navigating the current economic landscape.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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