Bond King Bill Gross Predicts Mini Bear Market for Bonds, Bullish Outlook for Stocks

Renowned investor Bill Gross, co-founder of PIMCO and widely known as the “Bond King,” issued a sobering forecast for U.S. Treasury investors while delivering an optimistic outlook for the stock market.
In a post on X Tuesday, Gross warned that persistent high U.S. fiscal deficits and a weakening dollar are fueling inflation, making it unlikely for the 10-year Treasury yield to drop below 4.25%. “I see the bond market heading toward a mini bear market,” Gross wrote, citing historical trends that show the 10-year Treasury yield typically sits about 1.75 percentage points above the Consumer Price Index (CPI). With the CPI unlikely to fall below 2.5% due to ongoing fiscal pressures and increased bond supply, Gross expects yields to hold firm around their current level of 4.3%.
On the flip side, Gross is bullish on U.S. stocks, predicting a “mini bull market” driven by the relentless momentum of artificial intelligence (AI). “The stock market, powered by AI, will keep pushing forward, supporting 1% to 2% economic growth,” he noted.
The stock market has already shown resilience, rebounding from a sell-off in early April sparked by concerns over Trump’s tariff policies. The S&P 500 has climbed over 3% in recent weeks, nearing its mid-February peak, while the tech-heavy Nasdaq 100 hit a record high on Tuesday. Wall Street analysts say institutional investors are likely to ramp up stock exposure, following retail investors who capitalized on the earlier dip.