The rally in Treasuries this week is stoking concerns that the $5.3 trillion market for U.S. government debt is a bubble waiting to burst, according to Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., which oversees the world’s largest bond fund.
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” Gross said in a Bloomberg Television interview on Dec. 10. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk?”
The U.S. has pledged $8.5 trillion, more than half of the country’s gross domestic product, to spur lending and bail out troubled companies to limit the damage of the recession.