The Federal Reserve will keep interest rates near zero in 2010, but longer-term rates will gradually tick higher because of supply and demand, Bill Gross, founder of Pimco, told CNBC Monday.
"We have a lot of supply and perhaps not as much demand to satisfy that supply, and that may actually reinforce the move towards higher rates on the longer end of the yield curve," he said.
Gross said that stocks will perform "alright" in the long-term, but investors shouldn't expect the same double-digit returns as the Fed pulls excess liquidity out of the markets.
But Treasurys and other sovereign bonds, not stocks, are the most overvalued assets relative to the potential rate of inflation, he said.
(from CNBC, December 7, 2009)
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