Billionaire investor Bill Gross says the Fed easing up in fighting inflation could fuel a rally in government bonds
the Fed's year of aggressive tightening
– because when borrowing costs rise, investors can get better and less risky returns by parking their cash in savings accounts. But Gross now expects the central bank to start easing up in its war on inflation, after the crash in bond prices stoked fears of a financial crisis by sparkingThe California lender's share price plunged 86% in two days after it disclosed it had lost $1.8 billion completing a $21 billion fire sale of its fixed-income portfolio on March 9. The news caused a bank run as customers rushed to pull out their largely uninsured deposits, forcing regulators to take control of the bank.
Fears that the chaos would develop into a full-blown crisis have dragged on other financial institutions like. They've also fueled the expectation that the Fed will back down from its aggressive tightening campaign to prop up the value of struggling banks' investments and maintain financial stability.
Nearly 50% of traders now expect the central bank to pause its rate-hiking campaign at its next meeting in May, according to
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