Bill Gross, manager of the world's largest bond fund, said on Friday the decline in Treasury yields to 60-year lows reflect a high probability of recession in the United States.
Gross, the co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion, also told Reuters Insider television the US is running out of monetary and fiscal policy options.
'It is increasingly apparent to us that policy options are limited and that economic growth is slowing down,' said Gross said.
Thursday, Morgan Stanley warned in a research report the United States and euro zone are 'dangerously close to recession,' joining a number of firms that have slashed forecasts for global growth in the second half of the year. Not only are economists and investors bracing for a slowdown in the US, they are concerned about a deceleration in China's growth rate to persistent sovereign-debt turmoil in Europe.
Morgan Stanley cut its global GDP forecast to 3.9 per cent growth from 4.2 per cent for 2011, and to 3.8 per cent from 4.5 per cent for 2012.
'There's no doubt that (US) growth from the standpoint of employment or unemployment and growth from the standpoint of corporate profits is definitely a risk — whether or not we see a positive 1 per cent real GDP number I think is besides the point.'
Source : New Age
