Bill Gross warns debt growth could bring more market volatility

Bill Gross, the former PIMCO cofounder known as the “Bond King,” warned that rising government, mortgage and corporate debt is making the credit landscape unbalanced. The total has reached about $84 trillion, and federal debt is at 100% of gross domestic product, he wrote in a Financial Times opinion piece.

Gross said debt has supported growth but added to inflation and could slow the economy over time. He cautioned against long-term bonds, while making an exception for one-year Treasury bills, and warned that higher yields could squeeze corporate profit margins.

Hedge funds now hold 8.5% of Treasury debt, nearly double their share since 2023. Their leveraged trading can add to volatility and may reduce demand for government bonds as a safe haven during market stress, according to Capital Economics economist Joe Maher.

Read the full story at fortune.com.