Bond kings and former PIMCO colleagues Bill Gross and Mohamed El-Erian, are talking the Fed, and one of them isn’t too happy with central bankers.
In a letter to investors, Gross accused the Federal Reserve of “market manipulation” and said officials have “deferred long-term pain for the benefit of short-term gain.” He added that investors should know that they’re treading on thin ice.
He is referring to the zero interest-rate policies around the world introduced by central bankers as well as the Fed’s efforts in keeping yields low in the U.S.
“Capitalism, almost commonsensically, cannot function well at the zero bound or with a minus sign as a yield. $11 trillion of negative yielding bonds are not assets — they are liabilities. Factor that, Ms. Yellen, into your asset price objective,” he wrote.
Central bankers, including Fed Chair Janet Yellen, have “all have mastered the art of market manipulation and no — that’s not an unkind accusation — it’s one in fact that Ms. Yellen and other central bankers would plead guilty to over a cocktail at Jackson Hole or any other get together of PhD economists who have lost their way,” he added.