Bill Gross, manager of the world’s biggest bond fund, said an increase in the U.S. unemployment rates gives bonds yields room to decline.
The jobless rate increase to 7.9 percent from 7.8 percent allows the bond market a “period of rest,” Pacific Investment Management Co.’s Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene.
Payrolls rose 157,000 following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed Friday in Washington.
Central bank stimulus measures have made bond markets “bubbly,” Gross said. Pimco is avoiding longer-maturity debt because of the risk of inflation, he said.
Inflation for the 12 months ending in November was 1.4 percent, according to the Fed’s preferred gauge. That’s below the central bank’s longer-run target of 2 percent.
Gross recommended five-year Treasury securities after minutes of the Fed’s Dec. 11-12 meeting showed several policy makers said it would probably be appropriate to slow or stop purchases well before the end of 2013. The Fed is in its third round of bond purchases under the quantitative-easing stimulus strategy.
Gross raised the percentage of Treasurys held in his flagship $285 billion Total Return Fund to 26 percent in December, the highest level since July, according to the latest available fund data on Pimco’s website.
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