One of the big winners from the sudden furious rally in the US bond market: Bill Gross.
The former top guy at the world’s biggest bond fund may just be a marginal player with an up-and-down track record nowadays, but he nailed a rates bet made in late October.
Gross placed the wager, which he announced, as he often does, on X, in a somewhat obscure corner of the market. It involved loading up on short-dated interest-rate futures that closely track expectations for the Federal Reserve’s policy path. With traders ramping up bets on how much the central bank will cut its benchmark in the coming months, the securities have surged.
Gross, via a spokesperson, confirmed he bought 3,000 three-month March 2025 contracts tied to the Secured Overnight Financing Rate. Following gains on Friday, the wager, which is still active, has likely netted a more than $5 million profit, according to Bloomberg calculations.
Cooling jobs data and soft consumer inflation figures proved a boon for bond bulls last month, while dovish comments from Fed officials have helped turbo-charge the advance. Traders are now pricing in about 1.3 percentage points of policy easing for 2024, with the first cut now expected at the central bank’s May meeting, Bloomberg data show.
Gross earned the moniker of “bond king” while at Pacific Investment Management Co., the firm he co-founded in the early 1970s. At its peak, his main investing fund there managed more than $290 billion. Almost a decade after he was ousted from the firm, his opinions still draw outsize interest, whether it be from those seeking actual investing tips or merely out of schadenfreude.
Gross’s wager has done particularly well in recent days. On Friday the three-month March 2025 SOFR contract surged roughly 20 basis points, equal to a profit of as much as $1.5 million. That’s after big gains earlier in the week as well.
In the run up to this week’s advance, data showed hedge funds accumulated their largest ever net long position in SOFR contracts. Meanwhile in the cash market, JPMorgan Chase & Co.’s latest survey of their most active Treasury clients showed they’re as bullish as they’ve ever been.
(Updates with latest gains beginning in fourth paragraph)
