Global yields aid US bonds as Fed ups rates: Bill Gross, Janus Capital Group

Bill Gross said Treasuries will draw support from investors seeking alternatives to near-zero yields abroad, aiding the market as the Federal Reserve raises interest rates.
Treasuries fell a second day on Monday, with the 10-year note yield rising to the highest level in a month. US government securities dropped on Friday after a Labor Department report showed that US jobs growth was strong enough to maintain wagers of tighter policy from the Fed this year. The extra yield US 10-year notes offer over German peers widened to the most since December, based on closing prices.

JPMorgan Chase & Co lowered its forecast for how far US yields will rise this year. Economists predict the European Central Bank will cut its deposit rate, which is already below zero, when it meets on March 10.

“It’s not just what the Fed might do, but it’s the comparison relative to global markets” that will drive Treasuries, said Gross, who built the world’s biggest bond fund at Pacific Investment Management Co and is now at Denverbased Janus Capital Group. “Global markets, no doubt, are pulling down US rates,” Gross said.

Gross’s Janus Global Unconstrained Bond Fund has returned 0.4% in the past year, beating 85% of its competitors, according to compiled by Bloomberg on its institutional class of shares.

Benchmark Treasury 10-year yields climbed four basis points, or 0.04 percentage point, to 1.91% intraday on Monday, according to Bloomberg Bond Trader data. That’s the highest yield since February 2. The 1.625 percent note due in February 2026 fell 10/32, or $3.13 per $1,000 face amount, to 97 14/32.