Bill Gross, the famed investor who built Pimco into a $2tn asset manager, has warned that US stock and bond markets are set for a tougher time in 2020 as fiscal and monetary stimulus loses its “oomph”.
Both classes of assets have raced higher this year, as US corporate profit margins have largely held on to gains they made after the 2017 tax cut, and as the US Federal Reserve’s renewed commitment to monetary easing gave a big lift to fixed-income markets, flattening yields to record lows.
But Mr Gross, 75, told the Financial Times that gains next year would be much harder to come by, noting that central banks around the world have grown cautious about the effects of persistently low interest rates on personal and institutional savings. Fed chair Jay Powell has cut rates three times since July but has struck more hawkish notes in recent weeks, repeatedly batting down the idea that the Fed would use negative rates as a tool to combat future economic weakness.